American to Absorb Reno Operations on Aug. 31
American Airlines said Wednesday that it plans to formally absorb recently acquired Reno Air into its system Aug. 31, even though American and its pilots union have yet to work out a bitter dispute surrounding the purchase.
American, the main unit of AMR Corp. and the nation’s second-largest carrier behind United Airlines, bought Reno in February for $124 million as part of a major expansion in the West. Reno currently is flying as a separate entity under AMR’s ownership.
But Reno’s aircraft, employees and facilities will become part of American’s system Aug. 31, although Reno’s jets won’t start getting American’s paint scheme until early next year.
Meantime, American plans to make the changes regardless of whether the carrier and its pilots union, the Allied Pilots Assn., are still at an impasse over how quickly Reno’s pilots should be covered by the American pilots’ contract, said Michael Gunn, American’s senior vice president of marketing.
“We are prepared to move ahead,” Gunn said.
The dispute sparked an eight-day sickout by American’s pilots in February, which forced the airline to cancel thousands of flights and cost it more than $200 million. A federal judge in Texas eventually fined the union $45.5 million to compensate American, though the union still might appeal the decision.
Both sides are expected to resume mediated talks over the issue next week. In essence, the union wants Reno’s pilots covered under American’s contract immediately, while American favors a more gradual approach.
Union spokesman Drew Engelke said American’s date for absorbing Reno is “two years ahead of the time frame” previously given to the union, and “we’ve received no assurances from the company stating” that Reno’s pilots would immediately be covered under all provisions of the American pilots’ contract.
Even so, “our objective all along has been to arrive at a negotiated settlement,” Engelke said, adding that he hopes a deal can be reached within the next two months.
American, which virtually abandoned the West in 1993 when the airline was in dire financial shape, is now making a major push to expand its West Coast business--especially because United has boosted its Western presence and made Los Angeles one of its hub cities.
The Reno purchase alone will add nearly 150 daily nonstop flights to American’s Western operations, especially on north-south routes where American has been a weak player. They include 30 daily flights from Los Angeles to five new destinations: Reno, San Francisco, San Jose, Las Vegas and Colorado Springs, Colo.
Gunn noted that American also is spending $245 million to expand and improve its terminal at Los Angeles International Airport, a project due to be completed in August 2001.
Shares of Fort Worth-based AMR fell 75 cents to close at $66.13 in New York Stock Exchange composite trading.
