American Airlines merger plan draws no major objections
BY KYLE ARNOLD World Staff Writer
Saturday, March 16, 2013
3/16/13 at 7:11 AM
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American Airlines' pending merger with US Airways moved a step closer Friday after no major groups filed objections to the plan.
The two airlines now await a March 27 hearing at which U.S. Bankruptcy Judge Sean Lane will consider a motion to merge, as well as American Airlines' request for six more weeks to submit a reorganization plan - until May 29.
Friday was the deadline to file objections to the merger proposal in a New York bankruptcy court.
The court did receive one objection from a former employee and two notes of concern from creditors before the 3 p.m. deadline, but any major objections would have had to come from the important unsecured creditors committee, which holds most of American Airlines' debt.
"It's going to be like the other mergers, basically, and it should go pretty smoothly," said Michael Boyd, an airline industry analyst with Boyd Group International Inc. in Evergreen, Colo.
American Airlines parent AMR Corp. and US Airways Group announced their merger plan last month, a combination that would create the world's largest airline. The plan provides a path for American Airlines out of bankruptcy, which it filed in November 2011.
The merger, now the center of American's bankruptcy reorganization plan, would value the new company, American Airlines Group Inc., at around $11 billion.
US Airways CEO Doug Parker, who would be the top executive of the new carrier, said the merger would help make AMR creditors whole, as well as secure the future of the American Airlines company and brand.
The lack of objections is no surprise to industry analysts, who noted that American Airlines and US Airways labored in the months before announcing their plan to get creditor and labor groups on board.
US Bank did file a "limited response" to the merger, questioning the proposal to give shareholders of bankrupt AMR Corp. a 3.5 percent stake in the new company, which could be valued at more than $300 million.
The court filing by US Bank said AMR owes more than $37 million from bonds and interest. The bank wants to make sure creditors such as itself are paid before shareholders, who often receive nothing during a bankruptcy reorganization.
"These conditions are necessary given, among other things, public indications that the Plan may include distributions to equity holders - circumstances that must be evaluated against whether creditors will be paid in full," the US Bank filing states.
While the bankruptcy court will hear the merger motion and the request to extend the reorganization plan deadline on March 27, it is unclear whether Lane will make a ruling on either matter at that time.
Another hearing covering a longer list of issues is slated for April 3.
Original Print Headline: US Airways, AA see little objection to merger plan
Kyle Arnold 918-581-8380
kyle.arnold@tulsaworld.com
Associated Images:
An American Airlines jet is parked at the carrier’s maintenance base — its largest — at TulsaInternational Airport. STEPHEN PINGRY/Tulsa World file
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