AMR Corp. (AAMRQ) Chief Executive Officer Tom Horton asked an ad hoc bondholder group to study his plan for a stand-alone American Airlines before reviewing a possible merger for the bankrupt carrier, two people familiar with the matter said.
The group, which holds about $700 million in AMR debt, supports that sequence for its review, said the people, who asked not to be identified because the meeting was private. Horton expressed frustration with attention being given to a pending US Airways Group Inc. (LCC) merger bid, the people said.
The process discussed at yesterdays session in New York is the one being followed in AMRs bankruptcy, with the company agreeing to consider options after detailing its own strategy to stay independent. The ad hoc group organized outside of U.S. Bankruptcy Court and isnt obliged to follow the same steps.
Hortons meeting was his first with the bondholders, who formed two such groups in an effort to gain leverage and reap the largest return. Chief Restructuring Officer Beverly Goulet told bondholders about two weeks ago that AMR will win more union concessions than US Airways, and that it should be allowed to negotiate a merger after leaving Chapter 11, the people said.
As part of his presentation, Horton cited evidence that he said showed Fort Worth, Texas-based Americans stand-alone plan is working, including an industry-leading improvement in a benchmark revenue measure last month, according to the people.
US Airways
US Airways CEO Doug Parker told shareholders at the carriers annual meeting today in New York that the Tempe, Arizona-based airline was making great progress toward a merger. Restructuring in bankruptcy wont be enough to fix Americans weaknesses, he said.
We are completely confident in the strength of our plan for success, American said in a statement in response.
The bondholder groups wont meet with US Airways until after a judge decides whether American can reject existing union contracts and negotiate new terms that will help cut annual labor costs by $1.25 billion, people familiar with their strategy have said. AMR filed for bankruptcy on Nov. 29.
US Airways has told bondholders it would provide greater returns from its labor accords with Americans unions, flexibility with plane leases, and a projected $1.2 billion in annual savings and new revenue in a merger.
To contact the reporters on this story: Jeffrey McCracken in New York at [email protected]; Mary Schlangenstein in Dallas at [email protected]
To contact the editors responsible for this story: Ed Dufner at [email protected]; Julie Alnwick at [email protected]