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Pilots approve new contract with American Airlines

Published on NewsOK Modified: December 7, 2012 at 6:48 pm •  Published: December 7, 2012

DALLAS (AP) — American Airlines is closer to exiting from bankruptcy and possibly merging with US Airways after its pilots approved a new labor contract.

With the pilots' deal announced Friday, American has negotiated new, lower-cost contracts with all its unions since filing for bankruptcy protection just over a year ago.

Company executives insist the savings will let American compete as an independent airline. But rival US Airways has been pressing to merge, arguing that both must get bigger to succeed against huge rivals United and Delta. And US Airways executives want to run the combined company.

American and US Airways will keep talking about a potential deal. Thomas Horton, the CEO of American parent AMR Corp., said Friday that his company could make a decision soon.

But with AMR in bankruptcy, it could be its creditors who make the call. The pilots' contract was the last big unknown in American's restructuring, and creditors are likely to turn now to whether they would make more money if American merges or remains on its own.

The Allied Pilots Association announced Friday that 74 percent of its members voted to ratify a new contract three months after they rejected a similar offer. Union leaders lobbied hard for passage the second time around. They favor a merger and believe that Friday's vote made a deal more likely.

"This contract represents a bridge to a merger with US Airways," said pilots' union spokesman Dennis Tajer. He said the vote "should not in any way be viewed as support for the American stand-alone plan or for this current management team."

AMR leaders have seemed to favor emerging as an independent airline before considering a merger. On Friday, they hailed the pilots' vote as a key step in AMR's turnaround after years of heavy losses.

In a message to employees, Horton called the deal an important milestone and said AMR is nearing the end of its restructuring.

Horton said AMR is also wrapping up its study of whether to remain independent or merge with US Airways. He said he is "confident the new American will be very strong" but is still evaluating the merits of a merger.

"We expect to have a conclusion on this soon," he said.

US Airways declined to comment, citing a confidentiality agreement it signed with American when the two began talks several weeks ago.

AMR and American filed for bankruptcy protection in November 2011. With the pilots' deal in hand, the company could exit Chapter 11 early next year, a faster reorganization than those in the last decade at United and Delta.

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