If American Airlines and US Airways Group LCC.N merge, pilots of the carriers would initially be governed by the contract currently in place with American's pilots, according to terms of a memorandum disclosed on Tuesday.
The so-called memorandum of understanding has been approved by the leadership of the Allied Pilots Association, which represents American's pilots, and the US Airline Pilots Association, the union for US Airways pilots, as well as by the two carriers.
American parent AMR Corp (AAMRQ.PK), which filed for bankruptcy in November 2011, is weighing merging with US Airways against exiting Chapter 11 as a stand-alone company. A combined carrier's revenues would be on a par with the revenues of United Continental Holdings (UAL.N), which became the world's largest airline in 2010.
In a statement, American Airlines stressed that the memo of understanding would only become effective should a merger be approved, and added it outlines the process to reach a joint collective bargaining agreement for pilots.
The memorandum of understanding "was negotiated to give the parties greater clarity on both the costs and the pilot integration processes associated with a potential merger, as American reviews its strategic alternatives," spokesman Bruce Hicks stated.
In a message to members, the Allied Pilots Association said its 2012 collective bargaining agreement reached with American would be the "baseline contract for all pilots" should a merger take place.
The MOU would allow the pilots union to make $522 million in contractual improvements, or $87 million a year over six years, the APA said.
Additionally, the memo includes procedures for integrating pilot seniority lists and specifies that current American pilots would fly existing American aircraft, while US Airways pilots would fly that carrier's planes.
"We recognize the prospect for substantial improvements this potential merger holds for both pilot groups, APA President Keith Wilson and US Airline Pilots Association President Gary Hummel said in a joint statement.
(Reporting by Karen Jacobs; Editing by Kenneth Barry)