US Airways, American Airlines will merge

US Airways chief executive Douglas Parker told employees Friday that the company had taken initial steps toward a possible merger with rival American Airlines, which is in bankruptcy protection. In a letter to staff, Parker said a deal had been reached with three unions representing 55,000 American Airlines staff to push ahead with the deal. "Today's news does not mean we have agreed to merge with American Airlines," he told US Airways staff. "But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen." Reaching a deal with AA staff over the broad contours of labor relations is a key step toward ratifying a deal that has been rumored for weeks. American Airlines has struggled recently, filing for Chapter 11 bankruptcy on November 29, looking for protection from a massive debt burden and costly wage contracts. Parker said the merger made sense for both companies, which face competition from recently mergers of rivals United with Continental and Delta with Northwest Airlines. "Combining American Airlines and US Airways would create a preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably," he said.