US Airways Said to Brief AMR Creditors on Takeover Plan

Executives have laid out details of US Airways’ proposal for a combined airline to some members of the unsecured creditors committee and gotten a positive reception, said the people, who declined to be identified because the terms aren’t public. The goal would be to complete a merger before American parent AMR Corp. (AMR) exits Chapter 11, the people said yesterday.iVXreEyDIPdY

US Airways has been making the overtures as American works toward its stated target of leaving court protection as an independent airline. Tempe, Arizona-based US Airways has said it learned the value of labor and creditor backing after its hostile bid for Delta Air Lines Inc. (DAL) collapsed in 2007.

AMR remains focused on its own plan “to achieve revenue growth and a highly competitive cost and debt structure,” a spokesman, Andy Backover, said in a statement. A US Airways spokesman, Todd Lehmacher, said the airline had no comment.

US Airways Chief Executive Officer Doug Parker has acknowledged hiring advisers to weigh a bid for Fort Worth, Texas-based AMR, and he told reporters in Phoenix on March 21 that the review probably will continue “for quite some time.”

Shares, Bonds

i6mb6vgz_5hwUS Airways rose 0.6 percent to $7.37 at 10:01 a.m. in New York. AMR’s 9 percent notes due September 2016 jumped 12 cents to 43 cents on the dollar at 9:54 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

AMR filed for Chapter 11 on Nov. 29 after annual losses that began in 2008. U.S. Bankruptcy Court in Manhattan yesterday extended AMR’s exclusive right to file a reorganization plan until Sept. 28, from the end of March. Nothing prohibits potential suitors from talking with the creditors panel or other parties in the bankruptcy.

Tom Hoban, a spokesman for the Allied Pilots Association, said that if the union couldn’t reach a consensual labor agreement with AMR as the carrier seeks to rework contracts, the group might be willing to work with new management brought in as the result of a merger.

“We’ll consider all options on the table,” Hoban said in a March 21 interview. “Whether that means another suitor that’s capable of bargaining effectively, I don’t know. That scenario hasn’t presented itself yet.”

Union Seats

The APA has a seat on the creditors committee, as do American’s two largest unions: the Association of Professional Flight Attendants and the Transport Workers Union, whose members include baggage handlers and mechanics.iWPJOj1fodMg

Labor relations at American, the third-biggest U.S. airline, have been a flash point after more than five years of talks failed to produce new contracts before AMR’s bankruptcy. Labor savings of $1.25 billion, including 13,000 job cuts, make up the largest part of American’s Feb. 1 plan for $2 billion in cost reductions.

The airline told U.S. Bankruptcy Judge Sean Lane yesterday it would seek authority next week to void existing union contracts and impose new terms if talks to secure concessions don’t produce agreements by then.

Delta and private-equity group TPG also are assessing potential bids for AMR, people familiar with the matter said in January.






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