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satpak77
04-26-2012, 09:29 AM
AMR Likely to Consider Merger in Bankruptcy, Adviser Says - Bloomberg (http://www.bloomberg.com/news/2012-04-25/amr-will-likely-consider-merger-in-bankruptcy-adviser-says.html)

American Airlines, as part of its bankruptcy reorganization, will probably consider a merger as it seeks to get the best deal for stakeholders, an investment banker for the airline said in court.

David Resnick, chairman of global financing advisory at Rothschild Inc., was asked yesterday at a court hearing whether a merger would be considered before exiting bankruptcy. He said it’s likely because American is obliged to get the highest value for stakeholders.

“Stakeholders would want to ensure they are getting the highest possible value so they would want the debtor to look at alternatives to a stand-alone plan,” he said during testimony in U.S. Bankruptcy Court in Manhattan.

Resnick’s comments come as US Airways Group Inc. (LCC) seeks to build support for a possible takeover of American parent AMR Corp. (AAMRQ) Tempe, Arizona-based US Airways is targeting AMR’s unsecured creditors committee after winning the backing of the carrier’s biggest unions.

US Airways Chief Executive Officer Doug Parker said yesterday on a conference call with analysts and investors that agreements with the labor groups were a “big step” as the company progresses from the unions to the creditor panel and eventually to AMR’s board.
Labor Contracts

Resnick was testifying as part of American’s effort to win court approval to void labor contracts with unions. The Fort Worth, Texas-based airline is seeking to cut $1.25 billion in annual labor costs in its restructuring. Jeffrey Brundage, senior vice president of human resources at the company, is scheduled to testify today.

When the hearing on the union contracts began April 23, AMR Chief Executive Officer Tom Horton said in a letter to employees that any decision to pursue a merger is “the charge” of the board of directors and the company’s leadership “in close collaboration with the creditors committee.”

“Everyone should understand that what’s best for our company, our people and our financial stakeholders will be determined by the facts in a disciplined manner and process,” Horton wrote. “And this includes whether American will choose to pursue any combination down the road.”

Resnick testified yesterday about a presentation to the creditor’s committee that discussed consolidation opportunities.
‘Our Focus’

During his testimony, when asked when AMR should consider strategic alternatives, Resnick said the airline should develop a stand-alone plan and use it as a basis for comparing alternatives such as a merger. A stand-alone reorganization would pay unsecured creditors with equity in the reorganized company, he said.

“Our focus to date has been on the stand-alone plan,” he said.

Alexander Dichter, an AMR adviser who works at consulting firm McKinsey & Co., also argued in favor of first developing a business plan during his testimony today. The power a company brings to merger negotiations is linked to its business plan, he said.

“We believe strongly it is very important to have a viable stand-alone plan before you consider such alternatives, not just on paper but in actuality,” Dichter said.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).


eaglefly
04-26-2012, 09:43 AM
I think they pretty much have to acknowledge that (at least on the surface), otherwise it looks like they are acting in their own interests as opposed to creditors.

satpak77
04-26-2012, 11:31 AM
ok good point


Wingtips
04-26-2012, 02:13 PM
the AA board is now going to deal with USAIR. Smart move by USAIR, get the Union to spark the merger ball, give them some too good to be true deal, then management has no choice but join in or lose everything. Now AA pilots will get their court imposed contract, AA management will get the UAL deal of some stupid CEO defacto title for x years and a golden parachute. In the end everyone yet again gets screwed. I bet the APA is not smiling so much today, I am not sure why no one saw this coming.

AA management wanting a merger with them, is much more valuable and cheaper than buying out 3 unions. Usair just had to find the way to push the management to get on board.

eaglefly
04-26-2012, 02:24 PM
the AA board is now going to deal with USAIR. Smart move by USAIR, get the Union to spark the merger ball, give them some too good to be true deal, then management has no choice but join in or lose everything. Now AA pilots will get their court imposed contract, AA management will get the UAL deal of some stupid CEO defacto title for x years and a golden parachute. In the end everyone yet again gets screwed. I bet the APA is not smiling so much today, I am not sure why no one saw this coming.

AA management wanting a merger with them, is much more valuable and cheaper than buying out 3 unions. Usair just had to find the way to push the management to get on board.

More certainites from someone on the outside looking in. I think you misread or misunderstood what the real meaning was. The desired plan by managment at least, is still a reorganization as a stand-alone carrier and then a likely merger after exit (it's the only real way for AMR exec's to cash-in). However, they must give the appearance they are considering all options. Until Parker actually produces a business plan for others to consider, they won't abandon AMR in favor of labor. IF Parker can do that and court both the creditors and BOD, THEN he's got a shot at gaining 2 creditors throwing their support behind his plan as one that produces better value for creditors. There's a whole myraid of politics (and timing) going on here that's even beyond my comprehension. This wont occur before June when either AMR has agreements with labor or Lane abrogates the contract(s) and AA begins operating under the term sheets.

Think of it as a very complicated combination of chess and tug-of-war.