UPDATE 4- AMR to advance with merger review, source says 5 airlines eyed
Related News
Tue Jul 10, 2012 10:22pm EDT
* CEO says will be reaching out to interested parties
* US Air, JetBlue, Alaska to be included -source
* Frontier, Virgin also included-source
* American sees itself as an acquirer -source
* Private equity, other carriers may be interested -source
By
Soyoung Kim
NEW YORK, July 10 (Reuters) - The bankrupt parent of American Airlines said on Tuesday it will press ahead with evaluating potential mergers and will reach out to interested parties, a move set to satisfy some creditors less than impressed with its stand-alone restructuring plan.
A source familiar with the situation said AMR
sees itself as an acquirer in potential mergers and at least five airlines -- US Airways Group Inc, JetBlue Airways Corp, Alaska Air Group, Republic Airways' Frontier Airlines, and Virgin America -- will be considered.
Any merger proposals would be weighed against the standalone restructuring plan being developed, the source added.
American has faced mounting pressure from vocal members of its creditors committee, led by its largest labor unions, who have argued that a merger with US Airways would give the combined carrier a strong network to compete with rivals beefed up by their own mergers. US Airways has expressed interest in a merger and has been courting AMR's creditors.
Executives at American, the No.3 U.S. airline, mentioned the five carriers as potential merger candidates at a meeting with its unsecured creditors committee on Tuesday and discussed the merits and challenges of each combination, said the source, who asked not to be identified because the matter is not public.
Chief Executive Tom Horton said in a letter to employees that greater clarity on revenue and the company's cost structure was allowing a review of potential mergers.
"It now makes sense to carefully evaluate a range of strategic options, including potential mergers, which could make the new American even stronger," he wrote.
The letter comes two months after American said it would explore merger options while still in bankruptcy.
US Airways said in a statement it was pleased with the development.
"All we have asked for is a fair and balanced opportunity to present our plan versus others, and we are hopeful this is the beginning of such a process," US Airways said. "We remain confident that our plan will maximize value for all stakeholders."
The source also said private equity firms, other legacy U.S. carriers and even foreign airlines may show interest in a potential deal or investment once American starts the evaluation work.