AMR Decision to merge or remain stand-alone expected by end of year

AMR decision to merge or remain stand-alone expected by the end of the year, UCC says  

The uncertainty swirling around AMR Corp.'s bankruptcy restructuring could be resolved by the end of the year.

According to a filing made by the Unsecured Creditors Committee on Friday, the committee said it expects to compare American Airlines' parent company's stand alone restructuring plan with possible merger partners this fall and have the process completed by the end of the year.

"Consensual deals or abrogation of unresolved CBAs are necessary to the Debtors' successful reorganization so that the assumptions in the Debtors' standalone business plan can be validated. At the same time, strategic alternatives identified and explored by the Debtors in collaboration with the Committee must be compared against the standalone plan. The Committee expects that this process will be completed during the current calendar year and that the Committee should be in a position to support the Debtors' filing of a plan of reorganization after the Company and Committee have agreed on an emergence path," the filing said.

It continued: "While it is the Committee's expectation that consensual labor agreements should be achieved with all labor organizations before the Debtors file their plan or reorganization-which result is in the best interests of all stakeholders-the Committee also recognizes that, if it is not possible to secure ratified consensual agreements on appropriate terms with APA at American Airlines or the labor organizations at American Eagle, the Debtors may propose and prosecute a plan of reorganization while operating under abrogated collective bargaining agreements and imposed terms of employment that become the new status quo under the Railway Labor Act.

"The filing was made in support of the contract agreements American has reached with its flight attendants and mechanics union. The committee said it was also reluctantly supporting the equity stakes that both unions received as part of the agreements their members ratified in August.

The Association of Professional Flight Attendants will receive 3 percent of the new company when AMR emerges from bankruptcy and the TWU, which represents several workgroups including mechanics and fleet service workers, will receive a 4.8 percent equity stake.

"While the equity stakes negotiated with the APFA and the TWU are of significant concern to the Committee because of the dilutive effects such stakes will have on general unsecured creditors, the Committee has concluded that it will reluctantly support the equity stakes with those labor organizations that promptly reached consensual agreements," the filing said.

And the pilots may still get a piece of the new company too. The filing said it has agreed to support equity stakes for the remaining union groups at AMR that have not yet signed agreements if those unions reach new contracts quickly. American Eagle labor groups are voting on tentative agreements.

"The committee's support will continue only to the extent that ratified consensual agreements are reached promptly. The committee will not support equity stakes or claims for any labor organization that does not ratify a CBA nor will the committee support any further economic value going to labor organizations beyond the last, best and final offers made by the applicable Debtor," the filing said.