AMR, US Airways reportedly vote to approve merger
BY FROM STAFF AND WIRE REPORTS
Wednesday, February 13, 2013
2/14/13 at 6:37 AM
The boards of US Airways Group and bankrupt AMR Corp. late Wednesday each voted to approve a merger that would create the world’s largest airline, the Wall Street Journal reported.
According to the newspaper's sources, the deal will be officially announced early Thursday morning. The creditors of AMR Corp. and American Airlines would own 72 percent of the combined airline, and US Airways shareholders would own 28 percent.
US Airways CEO Doug Parker began pursuing a merger with American in January 2012, less than two months after AMR’s bankruptcy filing on Nov. 29, 2011.
The deal needs the approval of the bankruptcy court and federal officials. As far as the latter, one industry observer said he sees no potential problems coming from the Justice or Transportation departments.
“The two carriers may have to make a few concessions, but there’s nothing big looming that could scuttle the deal,” said Seth Kaplan, editor of Airline Weekly, in a telephone interview with the Tulsa World.
The combination has the blessing of the Transport Workers Union. The TWU represents a large group of American Airlines employees, including about 5,000 mechanics and additional related workers in Tulsa, where the carrier operates its largest maintenance base and employs 7,000 total.
The TWU already has pre-negotiated key parts of what would be its contract with US Airways. The two sides agreed on a 4.3 percent raise for TWU members if a merger happened.
A group of AMR bondholders with about $1.5 billion in unsecured debt said last month it was backing a merger and pushing for an agreement by mid-February. The bondholders concluded after reviewing confidential data that a merger would provide more cost savings and other financial benefits than a stand-alone American, one person said.
American is the nation’s third-biggest airline by passenger traffic with Tempe, Ariz.-based US Airways ranked fifth. Together, they would be bigger than current world leader United Continental Holdings Inc., although United would remain slightly larger if regional operations such as United Express and American Eagle are counted.
US Airways is the product of a 2005 merger with America West, which was smaller but controlled the deal and took over the bigger company’s name.
AMR sat out the last several rounds of consolidation in the airline industry and lost its perch as the world’s biggest airline in 2008. Its last major acquisition was TWA, which was bankrupt at the time, in 2001.
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