American Airlines parent AMR Corp. (AAMRQ:US), now reorganizing in bankruptcy, expects to reach a decision within weeks on whether to merge with US Airways Group Inc. or remain independent, Chief Executive Officer Tom Horton said.
The company’s board and unsecured creditors committee asked unions at Fort Worth, Texas-based American and at US Airways to help evaluate the benefits, costs and risks of a deal, Horton said today in a memo to employees.
“I can assure you we are conducting a collaborative, fact- based analysis to determine the best path forward for American,” Horton wrote. “While I cannot give you a precise date, I can tell you that we expect to bring this to conclusion within a matter of weeks.”
AMR has a board meeting set for Jan. 9 at which it hoped to be ready to decide whether to go ahead on a tie-up, people familiar with the matter said in mid-December. US Airways (LCC:US) has been pursuing a merger with American, which filed for bankruptcy in November 2011, to form the world’s largest carrier.
Progress toward a possible tie-up continues.
The board of the Allied Pilots Association, which represents 8,000 American pilots, approved an interim labor agreement last weekend that removes one more hurdle to a merger.
The deal is now being considered by the US Airline Pilots Association, which represents 5,200 US Airways pilots, and management at both carriers, the APA said on Dec. 29. Approval would blunt the risk of labor objections to a merger by easing the two unions toward a joint contract aligning pay and work rules.
American is assessing that agreement as part of the merger evaluation, Horton said in his message to employees.
“I have been personally involved in all deliberations regarding the overall strategic review and focused intently on creating a framework with the unions and for all our employee groups that keeps American competitive and allows us to build a successful future,” Horton said.
A combination of American, the third-biggest U.S. carrier, and No. 5 US Airways would surpass United Continental Holdings Inc. as the world’s largest airline, based on passenger traffic.
AMR filed for Chapter 11 bankruptcy ahead of a fourth straight annual loss. Tempe, Arizona-based US Airways began pursuing a takeover in early 2012.
The case is in re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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