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American Airlines is open to private equity money for its reorg and bankruptcy exit

Dec 11, 2012 1:25 am

Eduardo Munoz  / Reuters

An American Airlines passenger jet glides in under the moon as it lands at LaGuardia airport in New York, New York on August 28, 2012. Eduardo Munoz / Reuters


American Airlines parent AMR Corp. is open to the possibility of seeking private equity or other outside funding to help pay for its exit from bankruptcy, Chief Executive Officer Tom Horton said.

AMR is close to completing its reorganization plan and its evaluation of bankruptcy-exit strategies from merging with US Airways Group Inc. to remaining independent. Horton, who has advocated for assessing mergers after the company leaves bankruptcy on its own, said in an interview today he hasn’t concluded that a stand-alone option is the best for American.

US Airways Group Inc. began pursuing a merger with American in January, and in November laid out its plan to the unsecured creditors committee in the bankruptcy.

“The capital structure of the new American has yet to be determined,” along with whether it will need a private-equity partner, said Horton. “The company is going to have industry- leading margins, and that will be attractive to a lot of folks.”

He said he expects the Fort Worth, Texas-based company to exit bankruptcy soon, without providing a time frame. AMR has maintained the more than $4 billion in cash and short-term investments it had when it filed for bankruptcy on Nov. 29, 2011.

A combination of American, the third-biggest U.S. carrier, and Tempe, Arizona-based US Airways, which is No. 5, would pass United Continental Holdings Inc. to become the world’s largest airline, based on passenger traffic.

Editors: James Langford and John Lear.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net. To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

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