American Airlines is in talks with a group of hedge funds interested in providing equity financing that would help it emerge from bankruptcy quicker and on a standalone basis, so that it gets on a stronger footing as it negotiates a potential merger with US Airways.

The group of distressed-debt funds holds more than $600 million in AMR bonds, the equity raise currently under consideration is between $1 billion and $2 billion. The investor group includes hedge-fund managers Carlson Capital LP, Claren Road Asset Management LLC, Pentwater Capital Management and Litespeed Management LLC, as well as J.P. Morgan’s J.P. Morgan Securities LLC.