Business 2013: American Airlines' future expected to dominate 2013 aerospace news
BY D.R. STEWART World Staff Writer
Sunday, January 06, 2013
1/06/13 at 4:10 AM
Barring NASA rover Opportunity's discovery of intelligent life on Mars or another terrorist attack involving commercial aircraft, AMR Corp. and American Airlines' bankruptcy restructuring is expected to be one of the major aerospace stories in 2013.
The possible outcomes for American's slide into insolvency are: emergence from Chapter 11 as a stand-alone carrier, merging with another airline (US Airways, JetBlue Airways, Alaska Airlines or AirTran Airways) inside or outside bankruptcy, or liquidation, industry analysts said.
A lot rides on the outcome: American employs nearly 6,000 people at its Tulsa maintenance base and thousands more work at vendors and suppliers.
Under non-disclosure agreements signed by executives of both airlines in August, American and US Airways representatives have been discussing how to combine departments, merge seniority lists, distribute equity shares of a merged company, compensation, severance and other issues, officials said.
A decision could come as early as Wednesday when AMR's board of directors meets in Fort Worth.
"It does seem like there is an inevitability about a merger, with the main issue whether they do it in bankruptcy or out," said Michael Derchin, who follows the airline industry for CRT Capital Group LLC in Stamford, Conn.
American Chairman and CEO Thomas Horton said he is determined to exit bankruptcy at the head of a stand-alone carrier.
US Airways Chairman and CEO Doug Parker and American's three unions - Allied Pilots Association, Transport Workers Union and Association of Professional Flight Attendants - are just as determined to install a new management team at a merged and reorganized airline.
"We cannot say that the bankruptcy has accomplished anything besides requiring further sacrifice from AA employees," said John Hewitt, chairman of maintenance at TWU Local 514 in Tulsa.
"While the TWU and the other AA unions have had some success in mitigating this sacrifice as compared to employees at other bankrupt carriers, we cannot call this an accomplishment."
Some analysts believe Horton's stand-alone plan may be a futile effort that could end with a second bankruptcy filing.
"We also think AMR probably wants to exit bankruptcy alone and then move later to buy US Airways, which would create a very different airline with arguably much less promise than the one US Airways can build," said Vicki Bryan, senior analyst at Gimme Credit, an independent corporate bond research service.
"As we long have pointed out, AMR frankly is too small and too unprofitable to ever seriously compete as a stand-alone against Delta Air Lines and United Continental, its labor relations record is appalling and its strategy for reorganization essentially is the same plan pursued over the past decade (and) which landed it in bankruptcy."
At NORDAM, the privately held Tulsa aerospace manufacturer and maintenance provider that employs 1,779 people in Tulsa, the new year will be marked by new programs and an expansion of one of the company's local plants, said CEO Meredith Siegfried.
"However, we are being cautious about hiring," Siegfried said. "While we have good projected growth in several of our divisions, recovery is still slow for the economy in general and the business jet market in particular. So ... we are projecting a flat year - both for NORDAM and for the industry as a whole."
Original Print Headline: A lot riding on AMR's future
D.R. Stewart 918-581-8451