AMR Bondholders Say They Want New Board Members after Bankruptcy

A group of AMR Corp. bondholders has told the airline's pilots union that it would support a stand-alone American Airlines after bankruptcy only if the company appoints a new board of directors. The debt owners detailed that stance in a letter to Keith Wilson, president of the Allied Pilots Association. According to a September court filing, the group included JPMorgan Chase and PentwaterCapital Management L.P. While the bondholders group doesn't hold a seat on AMR's unsecured creditors committee, it is seeking to have a voice in the airline's restructuring. Fort Worth-based AMR has indicated a preference to leave bankruptcy as an independent company, while US Airways Group has been pushing for a merger. "The implied message here -- and I don't think it's very subtle -- is we're getting rid of everybody who brought us to this day," said Vicki Bryan, a senior bond analyst with Gimme Credit. "We're clearing the deck and we will put in place people in favor of a more promising future, and that means the merger as soon as possible." The bondholder group intends "to be one of the primary negotiators of any plan of reorganization" because of its position as a material stakeholder in AMR, Gerard Uzzi of law firm Milbank, Tweed, Hadley & McCloy wrote in the letter dated Nov. 15. AMR said in August that the bondholders group was interested in providing financing for a restructuring, and the company won bankruptcy court approval in September to move forward on talks with the group. Messages left for Uzzi by phone and e-mail about the group's current membership weren't immediately returned. Mike Trevino, an American spokesman, declined to comment. Labor-management relations have long been strained at American, where five years of union talks starting in 2006 failed to produce new cost-saving contracts. Earlier this year, American's unions backed a merger with US Airways. The bondholders expect a new AMR board to consist "of mostly individuals without prior affiliation with the company," Uzzi wrote. The group's reference only to a stand-alone reorganization plan shouldn't be viewed as a sign of support for that option, the Allied Pilots Association told members. A merger would also force a change in AMR's board. American pilots are voting on a tentative labor agreement with the carrier that would give them a 13.5 percent stake in the restructured company. The union holds a seat on AMR's creditors committee, which has a say in major decisions made during bankruptcy.
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