Behind the scenes of the proposed $11 billion merger between American Airlines Inc. and US Airways Group Inc. are groups of in-house and outside counsel struggling with the myriad legal issues involved in creating the world's largest airline. But they won a unique victory in December when marathon negotiations ended in an agreement with both companies' pilot unions.
"This deal culminated after a fairly dramatic, two-week, round-the-clock, multiparty negotiating process in a room in Dallas over the Christmas [holidays]," recalled labor lawyer Robert Siegel. He is a partner at O'Melveny & Myers and was representing US Airways.
"Well, we did take some sleep breaks," Siegel corrected himself, "but there were some all-night efforts, and all of them were late-night efforts." Fortunately the negotiating room was located in law offices across the street from the hotel.
He said the deal helped pave the way for the two airlines to announce their approval of the merger on Feb. 14.
It still must pass federal antitrust and bankruptcy court scrutiny.
What made the agreement unique were two factors. First, the deal was cut as part of the merger negotiations while American Airlines was still in Chapter 11 proceedings in U.S. Bankruptcy Court for the Southern District of New York.
"As a general proposition, the fact that [the merger] is being done inside the bankruptcy is very significant," Kristin Going, a bankruptcy attorney at Drinker Biddle & Reath, told The Washington Post this week. Going represents Manufactures and Traders Trust Co., a large creditor of American Airlines' parent company.
"With that comes many different specific scenarios that haven't really been dealt with before," she told the newspaper.
Paul Jones, US Airways' vice president for legal affairs, recalled that the idea to negotiate with the pilots' unions before the merger closes came from his company president, Scott Kirby.
Siegel, who has worked through several airline mergers, explained that normally each union remains at status quo until a merger is complete.
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