US Airways merger offer to AMR Corp. takes center stage
BY Staff and Wire reports
Saturday, December 08, 2012
12/08/12 at 4:23 AM
See previous stories about American Airlines and its Tulsa operations.
Related story: Will merger fly?Original Print Headline: Details emerge on US Airways-AMR merger offer
The approval of a new contract Friday by American Airlines' pilots could speed action on an $8.5 billion merger proposal that reportedly is on the table from US Airways, analysts said.
The contract vote filled in the last piece of the labor-cost puzzle that confronted AMR Corp., parent of American. The company's creditors "very much wanted a contract because they want some visibility on what the cost structure will be," Ray Neidl, an airline analyst for Maxim Group PLC, told The Associated Press.
US Airways Group Inc. has formally proposed a merger that would give AMR creditors 70 percent of the combined company, which would be run by US Airways CEO Doug Parker, according to a person familiar with the discussions.
There have been reports that AMR might seek up to 80 percent for its creditors, which could be unacceptable to US Airways shareholders, the person said.
Last month, a committee of bondholders told the pilots union they would only support an independent American if AMR had a new board that would pick managers to run the airline.
The airlines have exchanged confidential financial information and talked about a potential merger for several weeks, although a deal is not certain.
The value of the deal under consideration is about $8.5 billion, a source told the Reuters news service on Friday. The Wall Street Journal also reported details of the story.
A merger agreement could be reached as soon as January, the person said.
AMR's executives, meanwhile, still are pushing a plan to emerge from bankruptcy as an independent airline.
Under the bankruptcy statutes, AMR has exclusive right until Jan. 28 to file a reorganization plan, and it has until March 28 to solicit support for the plan.
AMR has a motion before the bankruptcy court to extend until March 11 its exclusivity period to file a reorganization plan.
Bankruptcy law gives a debtor 18 months from the date of filing of its bankruptcy petition to exclusively file a reorganization plan. AMR filed its Chapter 11 petition on Nov. 29, 2011.
AMR's fate is in the hands of the Committee of Unsecured Creditors and Judge Sean Lane, legal authorities say.
The committee's nine members include American's Transport Workers Union, the Allied Pilots Association, the Association of Professional Flight Attendants, Boeing Co., and several banks and major creditors.
"If they don't have it done by July, they are at risk of somebody else filing a plan - the pilots union, US Airways," said Max Newman, a Michigan bankruptcy lawyer who has followed AMR's case.
All three unions support a merger with US Airways and have agreed to tentative contracts with the Tempe, Ariz.-based carrier that would be effective in the event the two airlines combine.
In August, American and US Airways signed non-disclosure agreements that permit the two carriers to exchange financial data.