American Airlines for merger talks

AMR, the parent company of American Airlines, bowed to pressure on Friday from its unsecured creditors, including its largest labour unions, and said it would explore merger options while it is still in bankruptcy. AMR, which has been in Chapter 11 since November, had long said it intended to reorganise as a stand-alone carrier, shrugging off interest expressed by rival US Airways Group. The carrier, however, has faced mounting pressure from vocal members of its creditors committee who believe a better future for AMR can be secured by merging with US Airways. In reversing its stance, AMR said it wanted to assure stakeholders that it would pursue the best possible outcome for the airline."To be clear, American has committed to work in collaboration with the [creditors] committee to develop only potential consolidation scenarios and this agreement does not in any way suggest that a transaction of any kind or with any particular party will be pursued," Beverly Goulet, AMR's chief restructuring officer, said in a statement. US Airways has been courting AMR creditors, especially disgruntled labour unions that say an AMR/US Airways tie-up would create a stronger carrier and save more jobs than AMR's stand-alone plan. "We look forward to engaging in the AMR process to demonstrate the significant advantages of our plan to maximise value for all constituents," US Airways said in a statement. Robert Mann, an airline consultant and former AMR executive, said AMR's new openness to mergers could flush out more potential partners. "I think it was already headed there anyway," he said. "It's a recognition of the inevitable that there would be some sort of transaction." American's three labour unions, which are part of AMR's nine-member creditor committee, have said a merger with US Airways would create a stronger airline and save more jobs than AMR's stand-alone plan. US Airways has not made a bid for AMR, which has a court-granted right to reorganise without intrusion by outsiders. That right extends to September. "The important point is that both the debtors and the committee are in alignment that it is incumbent on them to explore strategic alternatives on a collaborative basis as part of this chapter 11 case," Jack Butler, creditors committee counsel, said in a statement. US Airways said in April that a merger with AMR would generate at least $1.2 billion (Dh4.4 billion) a year in new value beyond the benefit that could be passed to employees of the combined carrier. AMR has said its stand-alone plan would generate $3 billion in new revenue and savings by 2017. AMR's chief executive, Tom Horton, had said the airline was focused solely on its bankruptcy, calling those who would attempt to acquire the company in bankruptcy "opportunists." But he never ruled out taking a merger partner after bankruptcy. Other potential suitors also have considered a deal with AMR, including Delta Air Lines and private equity firm TPG Capital, sources have said.