US positions for potential AA takeover, gaining support from AA unions

[dk4]

US Airways announced its intention to merge Friday and said it had already lined up support from the largest labor unions at American Airlines. The agreement with the unions was not a formal merger bid but the most significant move taken by US Airways to unite with its larger competitor.

US Airways pursuing merger with American Airlines - latimes.com

 

[fjc]

Another report here. US Airways moves to merge with American - Yahoo!7 Finance Australia

 

[Timba-Jet]

So now that US gave made their intentions clear, over to AA. Articles states US has more to gain by a merger. So what's really in it for AA?
Is bigger necessarily better?

 

[dk4]

So what's really in it for AA?

For AA management, nothing but the sack probably... therefore any future takeover by US is likely to be hostile (i.e. not supported by AA management).

For a hostile takeover of a company under ch11 protection to take place, the creditors would have to support it.

The bankruptcy court has appointed a board to represent the interests of the unsecured creditors.

Union members have seats on this board.

US will need to gain the acceptance of the majority votes on this board to be able to file its takeover plans for consideration by the court, by this route.

Thus - the unsecured creditors need to see more light at the end of the tunnel from a US take over, rather than the current AA management rescue plan. (So, this announcement by US and the Pilot, FA & Mechanics' unions is important, because it is their way of saying "yes" to that proposition.)

Us bigger necessarily better?

For US management, presumably they do see bigger as better.

For AA unions, it could double as a negotiating tactic to pressure for improved membership outcomes from the AA management plan.

 

[wandering_fred]

I'll add some speculation on US management intentions.

In that they have the "support" of the existing AA union membership, in a merged entity (because of the difference in size) any election for union representation would likely go in the direction of AA's unions. This would solve the 7 year old problem US has with their flight attendants (and the union representing US members) who have failed to ratify contract following the previous merger with US.

I wonder what flying the 50K miles (credited to AA) I need for LTG will get me in the medium term.

Not wandering, just looking in from the sidelines.

Fred