Having won support for a merger from bankrupt American Airlines' three largest unions, US Airways is now seeking support from the rest of American's creditors, CEO Doug Parker said Wednesday.
Tom Horton, CEO of American's parent company, AMR Corp., has said repeatedly that American intends to exit bankruptcy a stand-alone company.
But US Airways CEO Doug Parker said his company will continue to pursue a merger.
"While we would prefer to work in concert with AMR and their board and hope to before too long, we understand where their focus is," he said. "So instead, we're working with the employees and creditors at AMR."
After winning over the nine-member creditors committee, which includes the unions, bondholders, the Pension Benefit Guaranty Corp., Boeing and Airbus, Parker said US Airways would look to engage AMR's board of directors in a "cooperative process."
US Airways also reported its first-quarter earnings Wednesday. The carrier eked out a profit, as revenue rose and proceeds from a transaction with Delta Air Lines offset higher jet fuel costs. Revenue was up 10.3 percent compared with the same quarter last year, at $3.27 billion.
US Airways' first-quarter profit was $48 million, up from a $114 million loss in the same quarter last year. The company recognized a $70 million gain from a swap of takeoff and landing slots at airports last year with Delta. Without the slot swap money, US Airways would have posted a $22 million loss -- still better than analysts had forecast.
The Tempe, Ariz.-based carrier has been pursuing a merger with bankrupt American Airlines for months. On Friday, US Airways said it had reached post-merger contract agreements with unions representing more than 50,000 American pilots, flight attendants, and mechanics and ground personnel.
But management at American, which lost $1.7 billion in the first quarter, is fending off any merger talk. The company is in bankruptcy court this week trying to win permission to void union contracts and begin cutting 13,000 jobs, along with wages and benefits.
In a letter to American employees this week, Horton called US Airways' proffer "the easy way out," and insisted that American will pursue its plan to emerge from bankruptcy as an independent company.
Parker said Wednesday that a merger plan would be a better deal for employees of both companies. Parker has said his plan could save 6,200 jobs.
The combined company would cut duplicate costs to give remaining workers pay and benefits equal to larger competitors United Continental Holdings and Delta, executives said. Savings would come from cutting redundant facilities, reducing management, combining information technology systems, freezing pensions and other sources.
Even with higher wages and fewer job cuts, US Airways executives said a merged airline would generate an additional $1.2 billion a year.
Any merger plan would have to be approved by the bankruptcy judge, American's creditors and American's board of directors, and American retains the exclusive right to submit a reorganization plan until the end of September.
Demand high
US Airways reported strong demand for travel in the first quarter. On average, 79.3 percent of seats were filled, up from 78 percent in the same quarter last year.
Executives said Charlotte Douglas International Airport and Philadelphia International Airport have seen the strongest revenue growth in the first quarter, driven by their higher mix of business travel. Revenue from corporate accounts jumped 29 percent in the first quarter, US Airways said.
They also said Charlotte Douglas is the airline's second-most profitable hub. Only Reagan Washington National has a higher profit margin.
US Airways operates 630 daily flights from Charlotte Douglas International Airport, about 90 percent of the airport's total. In addition to a direct flight to Sao Paolo, Brazil, on the horizon, executives said US Airways could add more service to small markets from Charlotte Douglas.
US Airways has more than 7,000 employees based in Charlotte.
Operating expenses in the quarter rose 6.9 percent, to $3.2 billion. The high cost of jet fuel was the main driver, US Airways said. The company paid $160 million more for fuel than it did in the same quarter last year, a 16.3 percent increase.
US Airways also bolstered its war chest, with $2.54 billion in cash and investments, compared with $2.31 billion this time last year. The company has outstanding long-term debt of $4.23 billion.
Rival Delta Air Lines also reported a first-quarter profit Wednesday. The airline had net income of $124 million, mostly due to gains from fuel hedges that offset rising jet fuel costs. Excluding special items, Delta would have lost $39 million in the quarter.
US Airways stock closed up 29 cents, more than 3 percent, at $9.60 a share.
