American Airlines parent AMR posts wider loss

FORT WORTH, Texas, Wed Oct 17, 2012 – American Airlines parent AMR Corp. reported a wider quarterly net loss on Wednesday, as it took charges tied to worker severance costs and its Chapter 11 bankruptcy reorganization.

But excluding the special items, the company had a profit of $110 million for the third quarter as fuel costs fell and revenue edged higher.

The company, which had pilot absences and maintenance issues that led to flight cancellations and delays at American in the second half of September, said those incidents had no material effect on third-quarter results.

AMR, which sought U.S. bankruptcy protection last November, said its net loss had widened to $238 million or 71 cents a share, from $162 million or 48 cents a share, a year earlier.

Revenue rose 0.8 percent to $6.43 billion. Total operating expenses were up 0.6 percent, but fuel costs fell 3.3 percent.

American Airlines, which offers more than 3,500 daily flights on average, also said it planned to hire more than 1,500 flight attendants over the next year. It cited a big response by current flight attendants to its recent voluntary separation program.

AMR CEO, creditors to meet for restructuring update-sources

NEW YORK, Tue Aug 14, 2012 – AMR Corp. CEO Tom Horton is to meet creditors on Tuesday and provide an update on labor talks after pilots rejected a contract offer from the bankrupt parent of American Airlines last week, according to people familiar with the matter.

Horton and other senior executives are also expected to discuss American’s financial and operational performance, negotiations with its trade vendors and its ongoing review of potential mergers at a regularly scheduled monthly meeting with the airline’s unsecured creditors committee Tuesday, one of the people said.

American management led by Horton has met with creditors monthly to brief the group on different elements of bankruptcy restructuring. Labor uncertainty created by the pilots’ rejection of a new contract offer is likely to be one of the major topics this month.

The people asked not to be named because the matter is not public. American declined to comment, as did a lawyer for its creditors’ committee.

The meeting in New York comes a day before Judge Sean Lane, who oversees American’s bankruptcy, is slated to rule on whether the third-largest U.S. carrier can abandon its current labor contract and unilaterally impose temporary work terms while the two sides continue to negotiate a long-term pact.

Court allows AMR to keep reins on bankruptcy until December

NEW YORK, Thu Jul 19, 2012 – American Airlines’ bankrupt parent AMR Corp. won court approval on Thursday to extend through Dec. 28 its exclusive right to present a plan to emerge from bankruptcy.
Judge Sean Lane granted the request, which was supported by AMR Corp.’s creditors’ committee, at a hearing in U.S. Bankruptcy Court in Manhattan. The current exclusivity period was to have run out in September.
AMR went bankrupt in November, citing an untenable labor cost structure.
The extension, which blocks creditors from pushing their own proposals on how AMR should restructure its debt, comes amid efforts by US Airways Group to merge with AMR and as the American Airlines parent prepares to review a range of strategic options including potential mergers while it is in bankruptcy.
Extending the exclusivity period does not necessarily kill the prospect of a merger in bankruptcy. At the behest of its creditors, AMR is considering merger partners as part of its restructuring, and the sides could still negotiate a consensual merger deal during bankruptcy.
AMR Chief Executive Tom Horton met with US Airways CEO Doug Parker early on Thursday, and assured his counterpart that AMR’s strategic review process would be “objective” and “fact-based” and there is no pre-determined outcome, according to people familiar with the matter.
Horton said during the meeting that the company has the obligation to pursue a plan that achieves the highest value for its financial creditors and will take the necessary time to run the process, the people said. They asked not to be named because the meeting was not public.

American Airlines plans to cut 1,200 non-union jobs to save costs

FORTH WORTH, Thu Apr 19, 2012 — American Airlines plans to eliminate another 1,200 jobs as part of its plan to cut costs in bankruptcy, the company said in a letter to employees.

Affected jobs include non-union passenger and cargo agents, sky caps, and baggage service workers at smaller airports, including Memphis, Reno, Sacramento and Portland, Oregon.

American previously announced plans to eliminate 13,000 union jobs, or roughly 15 percent of its workforce, as part of an overall drive to save roughly $1.25 billion in annual labor costs.

The latest cuts would come on top of that, the company said.

As part of Wednesday’s announcement, No. 3 American said it would also close its southwestern reservations center in Tucson. Those workers, however, will be offered jobs elsewhere or set up as home-based employees.

American will also close its Admirals Clubs at Washington Dulles and Kansas City.

The latest changes, which do not require approval of the New York bankruptcy court, are expected to take place within the next few months, American said.

Other major rivals also cut thousands of jobs when they restructured in bankruptcy several years ago, emerging as leaner and tougher competitors.

AMR, the parent of American Airlines, filed for bankruptcy in November.

The company has also sought permission from the court to void union contracts, including those covering pilots, flight attendants and ground workers.

A hearing on that motion is scheduled for Monday.

American Airlines parent may reject union pacts

NEW YORK, Thu Mar 22, 2012 – The parent of American Airlines Inc. was preparing to void union contracts through the bankruptcy process within one week unless there was a “profound change” in the unions’ labor proposals, a lawyer for the company said on Thursday.

Harvey Miller, who represents AMR Corp., told a federal bankruptcy judge at a hearing in New York that there appeared to be no basis to expect “real forward movement” obtaining union concessions, and avoid the rejection of collective bargaining agreements. Talks were ongoing, he added.

AMR has been trying to cut labor costs, including thousands of jobs. The third-largest U.S. airline filed for Chapter 11 protection from creditors in November.

AMR bankruptcy could spur more airline consolidation

FORT WORTH ― For US Airways , the merger-hungry fifth-largest U.S. airline, a bankrupt American Airlines may present an irresistible takeover target, but many in the aviation world think the headaches and hassles of consolidation are not worth the payoff of such a tie-up.xxAmerican, a unit of AMR Corp., filed for Chapter 11 bankruptcy protection on Tuesday in a bid to shed some of its uncompetitive costs and restructure its debt.

Bankruptcy leaves the company vulnerable to potential takeover attempts from would-be suitors like US Airways, whose chief executive Doug Parker has long promoted consolidation as a means to slim down an industry plagued by overcapacity. US Airways once tried and failed to buy Delta Air Lines as it restructured in bankruptcy.xxSince the Delta/Northwest and United/Continental mergers, American and US Airways have been considered logical partners for a potential combination, but analysts have said American’s high labor costs and unresolved contracts with its unions make any deal too difficult to negotiate.xxSweeping cost cuts in bankruptcy could remove one potential hurdle, but analysts and bankers noted that US Airways still has its own challenges of having to integrate labor groups following its 2005 merger with America West Airlines.

“Strategically that’s one of the final combinations that could make sense, but there’s a real issue for US Airways to do a deal, as well as the fact that US Airways is still slightly smaller,” said one industry banker who asked not to be named because he was not authorized to speak with the media.

A second industry banker added: “US Airways still has two airlines. If they can’t combine those two houses, how they can combine with American? Today there is no labor deal at US Airways, and those labor deals still need to be negotiated.”

Analysts also said the benefits of any merger are less clear for American Airlines.

“From the standpoint of US Airways, it would be a huge opportunity,” said airline industry consultant Robert Mann. “It would take them into markets they don’t have access to today from a hub standpoint.

“Looking at it from the American Airlines’ perspective, it doesn’t make the combined American and US Airways network competitive with Delta or United (Airlines),” he said.

xFor a merger to appeal to American Airlines, Mann said, it would have to bolster American’s international routes. American Airlines is a global airline that hopes to lure business travelers with international partnerships and a hub-and-spoke model that focuses on cities that are major business centers.

US Airways has a strong presence on the U.S. East Coast but has less to offer in foreign markets.

Airlines in bankruptcy are logical targets for a rival willing to attempt a takeover, because the would-be acquirer can present a proposal to a committee of airline creditors rather than directly to the management team, which might be less inclined to take the deal.

Bankrupt airlines also are attractive takeover targets because they have court protection to cut costs and restructure debt.

Neither American nor US Airways would comment on merger prospects on Thursday.

American Airlines, parent company AMR file for bankruptcy

FORT WORTH, Texas ― American Airlines and its parent company AMR Corp. filed for bankruptcy protection on Tuesday after failing to win a deal with pilots earlier this month to pare its labor costs.

AMR had been the only major U.S. carrier to avoid bankruptcy proceedings in the past decade, a move its rivals had used to restructure their labor agreements and cut costs.

That left AMR, the third-largest U.S. airline behind United Continental Holdings Inc and Delta Air Lines Inc, with the highest costs in the industry, and the only major airline that still must fund worker pensions.

The airline said last month it was also suffering from soaring fuel prices that sent its costs 40 percent higher in the third quarter from a year earlier.

AMR also on Tuesday named Thomas Horton as its chairman and chief executive, replacing Gerard Arpey, who retired, the company said in a separate statement.

Under its Chapter 11 filing in a New York court, the company listed assets of about $24.72 billion, while it has liabilities of $29.55 billion. The company said it has $4.1 billion in cash.

AMR said both American Airlines and American Eagle are expected to fly normal schedules throughout the Chapter 11 process.

“We plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels,” CEO Horton said.

AMR’s top rivals, UAL Corp and Delta Air Lines, which both used bankruptcy protection to slash costs, have since found merger partners — Delta bought Northwest Airlines and UAL Corp bought Continental Airlines to form United Continental Holdings.

AMR has been in labor talks with its pilots for five years, and a wave of pilot retirements in October had prompted speculation the airline was nearing a bankruptcy filing.

Some industry watchers believed the pilots chose to retire to lock in pension values that may now be in jeopardy as the company moves through bankruptcy court.

The company said the bankruptcy has no direct legal impact on operations outside the United States and it was not considering debtor-in-possession financing.