Horton's team has done a relatively good job getting its house in order over the last few months, but he's allowed himself to become a bit of a clown as he's played defense and made what sound like extreme claims the last few weeks.
AMR Corp. Chief Executive Tom Horton wants to set the record straight.
He has considered a merger with US Airways or other carriers for years, but the timing was never right.
Since entering bankruptcy, he has wanted to get American Airlines’ finances in order before he considered combining with another carrier. And he will be in favor of a merger if it creates the most value for the new American Airlines — even if it means he won’t remain the top guy.
“I’ve tried to stay very focused here, and there has been a lot of theater taking place around the company,” Horton said in an interview on Wednesday.
Since AMR filed for bankruptcy in November, Horton said, his management team has been concentrating on the day-to-day operations of the company and restructuring the airline.
As a result, the carrier has posted the best growth in unit revenues in the industry for the past three months and reported its best on-time performance in the second quarter in seven years. In June, AMR recorded its first monthly profit since entering bankruptcy.
But the improved financial picture hasn’t stopped many on Wall Street from saying that a merger with US Airways would be better for American long-term than restructuring as a stand-alone carrier. And last week, AMR sent non-disclosure agreements (NDAs) to several carriers, including US Airways, to begin the process of evaluating potential merger partners.
Still, Horton said, all options remain possible, including going it alone.
“If US Airways, if any of the other alternatives, if the baseline plan, whatever it is … we’re going to look at what creates the most value for the owners,” said Horton.
The carrier will take the next couple of months to evaluate its alternatives. Horton said that since the carrier has previously considered merging with other airlines, it has already assessed synergies and strategic implications of various partnerships.
Horton would not say whether AMR has received signed agreements from possible partners. He also would not comment on whether the agreements included a “standstill” clause, which would prevent a merger candidate from talking directly to AMR’s creditors and bondholders.
Wolfe Trahan analyst Hunter Keay said the clause may keep US Airways from signing the agreement but that wouldn’t preclude a merger from happening.
“NDAs aren’t as sexy as they seem and [US Airways] might limit its options by signing one. And without a clear reason as to why [US Airways] declined to sign it, if that’s what they choose to do, we would not interpret that as a signal that [a merger] would be less likely, especially if the NDA is accompanied by a standstill agreement,” Keay wrote in a research note Tuesday.
US Airways said it has received the disclosure agreement but has not yet signed it.
Horton said he told AMR’s board of directors and the creditors committee that it is important for American to approach a possible merger or acquisition “from a position of strength.”
“We were very focused on making sure we had a strong baseline and whether this company pursues M&A or not, this side of restructuring or on the other side, this will be a very strong and profitable and growing company. I have no doubt of that,” Horton said.
Getting new agreements with its labor unions is a critical part of American’s restructuring plan. Currently, the pilots, flight attendants, mechanics and store clerks are voting on tentative agreements. All of the union groups, except for the flight attendants, are expected to announce vote results next week.
Horton said he was hopeful that the agreements are ratified by employees as he believes it is the best outcome for American’s workers.
During the interview, Horton asserted that while he approached US Airways first about a combination late last summer, once AMR’s board decided to file for bankruptcy protection, any merger idea would have to wait.
“It was clear that before we considered any further any ideas of combinations or acquisition, we had to get our own house in order,” Horton said. “That to me was really just common sense, so that’s what we did.”
Andrea Ahles, 817-390-7631. Twitter: @Sky_Talk
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