AMR granted extension on reorganization plan
BY D.R. STEWART World Staff Writer
Friday, November 09, 2012
11/09/12 at 4:41 AM
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AMR Corp., the bankrupt parent of American Airlines, has been granted 30-day extensions on when it must file a bankruptcy reorganization plan and solicit support for the plan, company executives said.
U.S. Bankruptcy Judge Sean Lane on Thursday approved the joint motion of AMR and the Committee of Unsecured Creditors (UCC) to extend the exclusivity periods to Jan. 28 and March 28, respectively, to file a reorganization plan and seek support for the plan. The motion was uncontested by parties in the case, court documents show.
Although the extensions apparently indicate AMR will be unable to emerge from bankruptcy within a year, as the company had hoped, executives said they are satisfied with AMR's accomplishments in Chapter 11 to date.
AMR filed for bankruptcy protection from creditors on Nov. 29, 2011.
"We are pleased by the court's approval today of our joint motion to extend the period during which only AMR may exclusively file a plan of reorganization," said AMR spokesman Mike Trevino. "We believe the extension reflects the progress and momentum of our restructuring efforts as reflected in our third quarter results, and we will continue to move aggressively to complete both our plan and our comprehensive process of reviewing a full range of alternatives."
In the third quarter, AMR reported a $238 million loss, or 71 cents per share, compared with a $162 million loss, or 48 cents per share, in 2011's third quarter. Third-quarter revenue was $6.43 billion, a 0.8 percent increase compared with the same quarter a year ago, on 2.3 percent less capacity than 2011's third quarter.
AMR's third-quarter results included $137 million in bankruptcy reorganization expenses, attorney and consultant fees, company executives said.
Excluding reorganization costs and special items, AMR posted a third-quarter net profit of $110 million, company officials said.
In its motion seeking extensions of the exclusivity periods, AMR said its case is large, complex and difficult.
"Extensions of the exclusive periods will enable American to further the cooperative relationship with the UCC, permit the satisfactory resolution of labor issues, including pension obligations, refresh American's fleet, take other actions to enable the attainment of a competitive cost structure, analyze potential recoveries after thorough review and analysis of claims filed in accordance with the bar date order, and thoroughly review with the UCC all strategic alternatives.
"... American and the UCC believe that the requested extensions are necessary in the face of the many tasks that must be pursued, reviewed and completed."
Among the alternatives under review by AMR and the UCC is a potential merger with Tempe, Ariz.-based US Airways.
In August, US Airways and American signed non-disclosure agreements under which the two may exchange confidential financial information.
American developed the non-disclosure agreement with the UCC, but the Fort Worth-based carrier is not disclosing other parties that could receive the agreement, executives said.
US Airways CEO Doug Parker has pursued American about the possibility of a merger since early in the year and he reached tentative contract agreements last spring with American's Transport Workers Union, Allied Pilots Association and Association of Professional Flight Attendants. The tentative agreements would be effective in the event of an American/US Airways merger, union and company officials said.
In addition to developing the non-disclosure agreement and presenting a comprehensive business plan to the UCC, AMR said in court documents that it has:
"The requested 30-day extensions of the exclusive periods are limited but warranted and necessary to afford the parties a meaningful opportunity to continue to pursue the Chapter 11 reorganization process and build a consensus among economic stakeholders, all as contemplated by Chapter 11 of the bankruptcy code," AMR said in its court filing.
- Undertaken an evaluation of its numerous aircraft and equipment leases as part of its fleet renewal strategy;
- Filed omnibus motions to assume 30 unexpired leases of nonresidential real estate;
- Acquired, executed sale-leaseback or financing transactions and put into service 22 new Boeing 737-800 aircraft;
- Conducted negotiations and reached new collective bargaining agreements with the Transport Workers Union and the Association of Professional Flight Attendants and is continuing negotiations with the Allied Pilots Association;
- Continued to work with the Pension Benefit Guarantee Corporation to resolve issues of underfunded pension plans and issues with the APA pension plan;
- Has been analyzing more than 13,000 proofs of claim totaling about $292 million filed in the case and has filed nine omnibus objections to the claims;
- Completed the organizational redesign of the company's management structure, and
- Responded to extensive inquiries related to the status and progress of the bankruptcy cases and specific contract counterparty demands.
Chapter 11 progress
- AMR Corp. granted additional
30 days to file bankruptcy
- Judge Sean Lane approves
30-day extension, to Jan. 28,
to file reorganization plan.
- Lane grants additional 30
days, to March 28, to solicit
support for reorganization
To date, AMR has:
- Reached new collective
bargaining agreements with
Transport Workers Union and
Association of Professional
- Continued negotiations with
Allied Pilots Association;
- Evaluated aircraft and equipment
leases as part of fleet
- Filed five omnibus motions
to assume 30 unexpired
leases on nonresidential real
- Agreed to nondisclosure
agreement with US Airways;
- Continued to work with
Pension Benefit Guarantee
Corporation to resolve issues
of underfunded pension plans;
- Analyzed more than 13,000
proofs of claim valued at $292
million filed in the case;
- Completed organizational
redesign of company management
Source: U.S. Bankruptcy Court for the
Southern District of New York
Original Print Headline: AMR granted reorganization extension
D.R. Stewart 918-581-8451