American Airlines Agrees To Consider Merger Options

DALLAS -- American Airlines says it is agreeing with creditors to consider potential mergers while it is still under bankruptcy protection.

American parent AMR Corp. says that the company and its bankruptcy creditors agreed to develop "potential consolidation scenarios," but that didn't mean it would pursue a deal with any particular party.

Still, Friday's announcement suggested that events could be moving faster than AMR had expected since US Airways turned up the pressure for merger talks.

AMR CEO Thomas Horton has said for months that he wanted American, the nation's third-biggest airline, to emerge from bankruptcy protection as an independent company. A bankruptcy judge granted AMR the exclusive right through late September to present a reorganization plan to the court. Politicians including Texas' senior U.S. senator appealed for everyone else to leave AMR alone.

None of that deterred US Airways, a smaller competitor – but a profitable one. US Airways has lobbied AMR's creditors and lined up support from American's three unions for a takeover.

On Friday hundreds of pilots and other employees marched into AMR headquarters in Fort Worth, Texas, and in New York to deliver a message of "no confidence" in AMR management. The unions believe that a combined company would cut fewer jobs and stand a better chance at competing with industry leaders United and Delta.

Beverly K. Goulet, AMR's chief restructuring officer, said Friday's agreement to work with the bankruptcy creditors committee on potential merger scenarios represented no change in AMR's belief that its fate will be decided by company management, directors and creditors. She said the agreement "does not in any way suggest that a transaction of any kind or with any particular party will be pursued."

US Airways, the nation's fifth-biggest airline, issued a statement late Friday praising AMR's decision. It said a combination would be best for both companies' employees and customers, as well as for AMR creditors and US Airways investors.

Jamie Horwitz, a spokesman for the Transport Workers Union, which represents mechanics and bag handlers at American, said he was pleased American would at least consider a merger while still in bankruptcy.

"We've run (newspaper) ads and done everything we could to tell the company to consider every option, and one is the possible sale or merger," he said. "It should be explored now rather than later."

Standard & Poor's, citing a Bloomberg News report earlier Friday, said news that AMR would consider a merger as an alternative to its stand-alone restructuring plan made it more likely that US Airways will acquire or merge with AMR.

S&P analyst Jim Corridore said a merger would fix US Airways' weak international network and give it size to compete with bigger rivals. S&P reiterated its "Buy" rating on US Airways stock, which rose 39 cents, or 3.6 percent, to close at $11.32.

Helped by talk of taking over AMR, US Airways shares have more than doubled in 2012, rising much faster than stock in competitors United or Delta.

___

AP Airlines Writer Joshua Freed in Minneapolis contributed to this report.

Comments

[graciejamielucky]

11:15 AM on 06/02/2012

All of the suggestion listed in previous comments all have merit, however there is one fact that
will not go away. It is the cost fuel. We who fly are nothing but human packages. If you go the post office, UPS or FEDEX with a package you are going to be charged for it's WEIGHT and SIZE.

If US airlines want to make money then they need to start charging folks by how much they
weigh. This seems to be a taboo subject.

Bottom line, it takes so much fuel to fly a certain amount of weight. We are human packages,
charge the fat folks more for their tickets.

If you think that the planes are crowded now, wait 10 or 15 years when 55 to 60 % of Americans
are obese.

[Michael Kat]

09:11 AM on 05/16/2012

I used to work for an airline (British Ariways) which is combined with American Airlines and Cathay Pacific. In their merger, British Airways takes 60% of the profits and AA and Cathay Pacific get 20% each. I am hoping that with the Olympic games coming up that AA sees a rise in profits. AA used to have a great reputation and I would like to see it redeem itself!

[Grichde]

12:15 PM on 05/14/2012

Were is the government bailout? if it worked so great for GM why isnt the government doing it for all companies?

[Janenotdoe]

09:43 AM on 05/14/2012

Timely article. I'm 62 years young... had never flown in my life ..or wanted to ..until this past weekend. In addition to fearing flying itself, there were also huge fears re: terrorism possibilities as well as being subjected to what I'd heard re: the various airlines & especially TSA, etc. I flew Delta from Richmond VA to KC, MO. Thankfully, my entire experience was a pleasure... even taking into account 1 flight being delayed. The DELTA crew & their airport staff could not have been nicer! TSA personnel in Richmond was super pleasant, yet thorough... as were the folks in Atlanta. The KC, Mo. TSA was lacking in personality, but still decent as far as "searhing" went. I have no complaints whatsoever, and delighted all of the dread I'd felt proved to be totally unnecessary.

[liberalbug]

01:28 AM on 05/14/2012

As long as we demand cheap flights, we will get what we pay for. Cramped seats, crappy service by extremely underpaid employees who deserve more, and a lot of passengers smelling up the plane with their McDonalds sacks, probably with kids kicking the back of your seat. Flying is an exercise in psychological shutting down of the brain for 2-9 hours. Get on, tune out, turn off, endure.

[rrsltx]

11:20 AM on 05/14/2012

It's the fastest, cheapest way of getting from point A to point B. Not a pleasant experience, but bearable for a few hours.

[dropthedh]

11:56 AM on 05/14/2012

Thanks to our money.

http://aglr.wordpress.com/2012/04/22/federal-air-travel-subsidies-is-essential-air-service-essential/

[Morgantheaxe]

12:50 AM on 05/14/2012

Airlines number one costs aren't planes or employees.....its fuel. When are we going to learn in this country that something as critical as energy/fuel can not be left to the whims of a commodities exchange. We let people who never ever had or will have a use for a vital resource buy it for no other purpose than putting their own personal tax on it and resell it. It is purely insane.

[Enimal57]

12:11 AM on 05/14/2012

I smell Robmey strategy: let it go bankrupt, fleece it and come back to milk it some more.

[IMeMine]

11:00 PM on 05/13/2012

The ever number of shrinking airlines is a critical, contributing factor to skyrocketing ticket prices and poor service. Allowing US Airways to gobble up American Airlines in NOT the answer.

[fauxshammity005]

10:08 PM on 05/13/2012

American Airlines Wants To Cut 13000 Jobs In Restructuring

www.huffingtonpost.com/.../american-airlines-wants-cut-13000-bank...

Feb 1, 2012 – If you guessed Bain Capital you were correct . Bain Capital is being paid $ 527000 A MONTH to advise American Airlines in their bankruptcy ...

[fauxshammity005]

10:04 PM on 05/13/2012

The company helping AA through this bankruptcy ? BAINE CAPITAL .

[mikefly562]

09:13 PM on 05/13/2012

I hope AA recovers. I recently had a trip to Barbados using AA and i thought they were fine. I never really had issues with AA.

[tinwhiskers]

06:24 PM on 05/13/2012

It would be awesome if they 'merged' with either Southwest or Virgin, with all the AMR senior managers getting the boot along with the board.

[Dewtrell]

10:08 PM on 05/13/2012

Virgin is a great airline - so no!

[tinwhiskers]

03:39 AM on 05/14/2012

I meant that Virgin would take them over and kick out the current AMR mgt creating a bigger Virgin.

[themodernleader]

04:35 PM on 05/13/2012

In our corrupt capitalism nothing works. Bankruptcy is our present and future as borrowing and debt has replaced growing factories, industry and growing competence of  the mightiest workforce on earth.

[dwill123]

04:26 PM on 05/13/2012

Anybody remember the U.S. railroad system.

[We didnt start the fire]

06:56 PM on 05/13/2012

I enjoyed the ride at Knotts Berry Farm when I was a kid. We even got held up !

[dropthedh]

12:00 PM on 05/14/2012

I am trying to forget my two hour commutes to NYC, but I would support more rail use. I am optimistic we could some day match the efficiency of the European trains. But I am not optimistic that Americans can give up their highways, at least not until we pay the same price for gas as the rest of the world.

[OutAtFirst]

01:25 PM on 05/13/2012

The only thing worse than going belly-up would be to merge with US Airways. If compatability were the major consideration, US Airways would be pursuing Ryan Air.