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UPDATE 1-American Air, union reach tentative pacts for US Airways workers

(Adds terms of tentative contracts, quote from Machinists' union spokesman)

* Annual pay increases of 3 percent for three years

* Better job security and medical benefits

* American Airlines stock climbs 1.7 percent

June 16 (Reuters) - American Airlines Group on Monday said the company and the Machinists' union reached tentative agreements covering more than 11,000 employed at US Airways as mechanics, maintenance training specialists and baggage handlers.

The three-year agreements, which provide 3 percent pay increases and improved job security and medical benefits, must be ratified by the employee groups.

US Airways, which merged with AMR Corp to form the new American in December, had been in contract talks with the union for about three years, the International Association of Machinists and Aerospace Workers said.

The tentative contracts include "gains in every item that was negotiated," IAM spokesman James Carlson said. "There was no step back in any category."

Ratification would pave the way for talks to begin on a joint contract that would cover the 30,000 ground workers at the combined carrier.

The Machinists' union and the Transport Workers Union of America, which represents the former AMR Corp ground workers, formed an alliance last year that will eventually seek to be certified as the bargaining agent for all the ground workers, Carlson said.

American Airlines shares rose 1.7 percent to close at $41.06 on Monday.

(Reporting by Karen Jacobs in Atlanta; Editing by Jan Paschal)