Not much has been off-limits in the American Airlines bankruptcy filing over the last few weeks. After several rounds of job cuts and talks of eliminating employee pensions, American has faced its fair share of criticism. Now that talks of a possible merger with US Airways strengthen, American is left fighting to stay independent in the midst of one of the largest Chapter 11 cases in airway history.
One of the biggest bargaining factors that US Airways has in its favor is its projected ability to add more than $1.5 billion a year in revenue to American’s books. In negotiating with American Airlines creditors, US Airways continues to boast about their potential for boosting revenue and bringing huge costs savings in efforts to swing the vote in their favor.
American, on the other hand, is not happy about the possibility of a merger and is working to avoid the take over at all costs. American is finding it hard to resolve its debts and emerge independent after bankruptcy without taking a chunk from the hands of employees, a move that is surely to persuade unions to vote in favor or a merger. Although no new ideas are on the table from American executives yet, the added pressure from US Airways circling is sure to bring much needed incentive to find alternative solutions to their debt problems without dipping into the pockets of employees. However, if US Airways is successful in swaying the vote from creditors in their favor, American may find it has run out of options.