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American Airlines wants a quick resolution one way or another on whether to pursue a merger with US Airways Group Inc or emerge from Chapter 11 on a stand-alone basis, AMR Corp Chief Executive Tom Horton said on Monday.
Now that labor contracts have been ratified by all the American Airlines unions – including by pilots last week – the carrier can work on its reorganization plan, under which it will propose emerging from Chapter 11 as either an independent carrier or as part of a merged entity, he said.
“The company’s plan is coming together and that plan will allow for an evaluation of a combination, which we’re going to try to see if that is something that could create value for our owners and create a better outcome for our people and our customers,” Horton told Reuters in a telephone interview. “Either now, or on the other side of the restructuring.”
US Airways made a formal merger proposal to American parent AMR and its creditors that values the combined airline at around $8.5 billion, people familiar with the matter have said.
Details of that proposal emerged as the airline’s pilots voted to ratify a new union contract last week, ending a years-long labor dispute and stabilizing the carrier as it tries to emerge from bankruptcy.
“We now have clarity on what the new American would look like and of course it will be very strong and profitable,” Horton said.
He added that the process would extend into early next year, but a quick resolution on whether to pursue a merger “would be in the interest of all parties.”
Horton became CEO of AMR as it filed for bankruptcy in November 2011, citing the need to cut labor costs to better compete against rivals. Horton replaced his friend, Gerard Arpey, who had resisted a Chapter 11 filing.
Horton said the profitability of the reorganized AMR “would stack up very well” against Delta Air Lines Inc and United Continental Holdings Inc, which are both the products of mergers.
The US Airways merger plan has the support of unions that represent its pilots, flight attendants and ground workers.
“It’s not about me,” Horton said when asked if he thought he could continue to lead the company.
“This is about delivering the best value for our owners. Any way you look at it, this will have been a very successful restructuring of the company.”
Horton began his career with AMR in 1985 and held various financial positions. He was appointed chief financial officer in 2000, but left two years later to join AT&T as CFO.
Horton returned to AMR in 2006 as CFO with expanded responsibilities for network, fleet and alliances. He became AMR president in 2010.
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