US Airways, AMR talks said to intensify as deadline looms
BY Staff and Wire Reports
Thursday, February 07, 2013
2/07/13 at 12:25 PM
US Airways Group Inc.’s merger talks with bankrupt American Airlines are intensifying as the sides try to agree on control of a combined company before confidentiality accords expire next week, people familiar with the matter said.
No decisions have been made on how ownership would be split between creditors of American parent AMR Corp. and US Airways investors or who would lead the carrier, said the people, who asked not to be identified because the discussions are private.
A deal would create the world’s largest airline, vaulting it past the rivals that eclipsed American amid a consolidation wave during the past decade. A combined carrier would be valued at almost $13.1 billion, according to Dan McKenzie, a Buckingham Research Group Inc. analyst in New York.
The possible merger gained support late last month from an ad hoc group holding $1.5 billion in unsecured AMR debt, people familiar with the matter said then.
The bondholders are pushing for a deal by Feb. 15, the expiration date for non-disclosure agreements they signed with the two airlines. Talks may still falter, and there is no guarantee of a merger announcement by then, the people said.
Besides giving those investors access to proprietary information, the accords restrict them from trading in AMR or US Airways debt.
Ed Stewart, a spokesman for Tempe, Ariz.-based US Airways, declined to comment to Bloomberg News about the deliberations, as did Sean Collins, a spokesman for American.
The negotiations are being watched closely in Tulsa, where American employs about 7,000 people and operates its largest maintenance base.
AMR has urged that creditors get 80 percent of the equity in a merged airline versus 20 percent for US Airways shareholders, while US Airways favors a 70 percent to 30 percent division, people familiar with the matter have said.
Still unresolved is the role American CEO Tom Horton would play after a merger, the people said. US Airways’ merger proposal calls for CEO Doug Parker to hold that position as well as chairman at the combined airline.
AMR’s board is pushing for Horton to have an active role to represent American’s interests and help ensure that $1.2 billion in annual savings and incremental sales promised by US Airways materializes, one of the people said. He became CEO after AMR filed for bankruptcy on Nov. 29, 2011.
If merger terms are agreed upon and approved by the bankruptcy court, the deal would be proposed as the reorganization plan to bring AMR out of Chapter 11 protection. A combination of US Airways, the fifth-biggest U.S. carrier, and No. 3 American would pass United Continental Holdings Inc. to become the world’s largest airline, based on passenger traffic.
US Airways earlier said it would keep the American name for a combined carrier and its Fort Worth, Texas, headquarters.
Parker has been pursuing American since January 2012. Horton agreed to consider merger options in restructuring after saying the airline preferred to exit court protection and then weigh consolidation.
Associated Images:
The new exterior paint job of one of 196 737-800 airlplanes that American Airlines will convert, on display during a tour stop in one of the hangers at the American Airlines Maintenance and Engineering facility in Tulsa last month. MICHAEL WYKE/Tulsa World File
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