AA to decide ‘within weeks’ about merger

Sun Aug 12, 2012 11:47 am (PDT) . Posted by: "Tony Leonhardt" tony_leonhardt American Airlines considers strategic options

American Airlines will decide within weeks whether to pursue a merger, including the “attractive option” of merging with smaller rival US Airways, the bankrupt carrier’s chief executive told the Financial Times.

Tom Horton, who took the helm at AMR, American Airlines’ holding company, in November as it filed for Chapter 11 bankruptcy protection, said the company had initially concentrated on restructuring its high costs to create a baseline for evaluating future options.

But it now has a “line of sight” of how the restructured company would look and plans to do a “fact-based, disciplined evaluation” of strategic options.

“It’s probably even a matter of weeks,” he said, speaking about when a decision might come. “We’re in the middle of that right now.”

Mr Horton told staff in July that the company would pursue a range of options as it charted a course for life after bankruptcy. AMR had originally been charged with drawing up plans for emergence from bankruptcy by September, but the courts have extended the deadline to December 28.

Most attention surrounding a potential merger has resulted from US Airways’ noisy campaign to persuade American’s creditors, staff and management of the value of a merger by the US’s third-biggest airline by revenues with the fifth-biggest.

Mr Horton has often sounded irritated by the tactics of US Airways, which he approached about a potential merger last year, before the Chapter 11 filing. But he said a US Airways merger was still a possibility. “It may be an attractive option under the right circumstances,” he told the FT. “Our view [earlier this year] was not that that combination was unwise. It was that that was not the right time to discuss it.”

There were “potentially meaningful revenue synergies” from a combination with US Airways, he added – although he also stressed that other combinations would also be considered and that remaining independent was also an option.

He was clear, however, that American would remain part of the One World Alliance, centred on International Airlines Group, British Airways’ parent, after any merger. US Airways belongs to the Star Alliance, led by Germany’s Lufthansa.

Mr Horton, chairman of One World, also hinted that the alliance was on the brink of signing up one of the fast-growing Gulf-based carriers – Dubai’s Emirates, Abu Dhabi’s Etihad or Qatar Airways – as a member. The Gulf carriers have hitherto avoided committing to an alliance.

 

 

http://www.ft.com/intl/cms/s/0/00dab556-e465-11e1-affe-00144feab49a.html#axzz23MDeS8VZ