American Airlines pilots reject contract

American Airlines' pilots overwhelmingly rejected a tentative agreement with the bankrupt airline Wednesday, putting their fate before a federal bankruptcy judge and potentially delaying US Airways' quest to merge and create the world's biggest airline.

The Allied Pilots Association, representing 8,000 pilots, voted 4,600 against and 2,935 in favor of the tentative contract.

An approval would have sped American's plan to restructure and emerge from Chapter 11 reorganization as a stand-alone company, or part of a merger, one airline analyst said.

Separately, American's mechanics and other workers narrowly ratified their own tentative agreement, the Transport Workers Union said.

An approval by the pilots' union would have gotten the company's restructuring plan "to a point that it can be evaluated versus other alternatives," analyst Jeffrey Kauffman, with Sterne, Agee & Leach, said in a client note.

"So what might this mean? It means increased uncertainty," Kauffman wrote. "The failure/success of a labor contract vote only changes the likely time line by months or weeks, but is unlikely to change the final outcome."

The votes came ahead of a hearing next Wednesday before a U.S. bankruptcy court judge, who has been asked by American to throw out current agreements and let the bankrupt company impose even more stringent concessions.

The judge will not let American exit bankruptcy without collective-bargaining agreements with its workers.

In other developments, a Washington think tank released a 28-page report saying that a possible merger between American and US Airways would reduce competition, create monopolies on some routes, and could lead to higher fares.

The nonprofit American Antitrust Institute and the Business Travel Coalition, based in Radnor, which represents corporate travel managers, said a combined US Airways-American would control about 20 percent of the U.S. market share, followed by Southwest Airlines Co. with 18 percent, United Airlines with 17 percent, and Delta Air Lines with 16 percent.

The study said US Airways and American have overlapping service on 22 routes nationwide, including two in Philadelphia - to Miami and Dallas-Fort Worth.

Spirit Airlines has announced that, starting in April, it will fly between Dallas-Fort Worth and Philadelphia.

American has about 4 percent of the market at Philadelphia International Airport, with 16 daily weekday flights to Chicago, Miami, and Dallas.

US Airways carries nearly 70 percent of passengers here, on 453 daily flights to 116 destinations.

US Airways says a merger with American would offer consumers more choice and help compete against bigger rivals, Delta and United.

Also on Wednesday, US Airways flight attendants announced that they had reached a tentative contract agreement.

The flight attendants and US Airways pilots have not had new contracts since the 2005 merger of US Airways and America West. The dispute centers on integrating the seniority lists.

In its desire to merge with American, US Airways reached provisional agreements with American's major unions in April that would give them more favorable terms and conditions than American's management has proposed.