Bowing to critics, AMR says it will look at merger offers even thought it doesn't think it's such a good idea.
Source: The Associated Press
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.
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Tags: american airlines