AMR Corp. (AAMRQ:US)’s American Airlines, which has agreed to share financial information with suitor US Airways Group Inc. (LCC:US), is seeking a one-month extension of a deadline for filing a plan to restructure and exit bankruptcy.
American, which faces a Dec. 28 deadline to submit the plan in court, asked for an extension to Jan. 28 in a filing today in U.S. Bankruptcy Court in Manhattan. The request is supported by the committee representing unsecured creditors.
“American has made significant progress in its restructuring,” said Sean Collins, a spokesman for the airline. “This work, while progressing well, takes time, and American and the unsecured creditors’ committee believe that the proposed 30-day extension is appropriate for this process to continue in an orderly and efficient manner.”
The Fort Worth, Texas-based airline, which will mark its one-year anniversary in bankruptcy next month, is working with creditors on a “collaborative review” of strategic alternatives and has reached a so-called nondisclosure agreement with US Airways “and others,” it said in the filing. US Airways backs a tie-up of the companies.
US Airways rose 1.4 percent $11.58 at the close in New York, leading gains among U.S. airlines. The shares have more than doubled this year on speculation that the fifth-largest U.S. carrier would succeed in a takeover of No. 3 American.
Dennis Tajer, a spokesman for the Allied Pilots Association, which represents American’s pilots, called the request for an extension “a positive” given the company’s agreement with Tempe, Arizona-based US Airways.
“Considering US Air and AMR are in discussions, we are pleased and can only assume that as long as the parties are talking, progress is being made,” he said in a phone interview.
The union for American’s flight attendants told members in an e-mail that it is encouraged that US Airways and American “have had substantive conversations and hopeful that this extension will bring us another step closer to a merger inside bankruptcy.”
AMR’s $460 million of convertible, unsecured 6.25 percent notes due October 2014 gained 0.5 cent to 66 cents on the dollar at 10:59 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They have almost quadrupled from 17.5 cents on Nov. 29, when AMR filed for bankruptcy.
American said in the court filing that it also needs time to continue negotiations with pilots on a new labor contract and analyze $292 billion in claims filed against the company as part of the bankruptcy case.
The approval of U.S. Bankruptcy Judge Sean Lane, who is overseeing AMR’s bankruptcy, is needed to extend the deadline. If granted, it will prevent others from proposing competing plans with the court.
American said that without an extension it would face “the threat of multiple plans, unnecessary adversarial situations and confrontations and a deterioration of the orderly” bankruptcy process.
The bankruptcy case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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