American-US Airways merger sealed with $11 billion deal

FT. WORTH, Texas, Thu Feb 14 — American Airlines and US Airways Group said they plan to merge in a deal that will form the world’s biggest air carrier, which will have a combined equity value of $11 billion.

The merger caps a wave of consolidation that has helped put U.S. airlines on more solid financial footing.

The widely expected deal has been more than a year in the making. American, a unit of AMR Corp, filed for Chapter 11 bankruptcy in November 2011, and US Airways began its pursuit of a merger in early 2012.

Key bondholder group says AMR board should be replaced

NEW YORK, Thu Nov 29, 2012 — A group of some of bankrupt American Airlines’  most significant bondholders said it will not support a standalone restructuring unless a new board is brought in, a move that may increase hurdles for CEO Tom Horton and his team.

The 12-member bondholder group, which includes JPMorgan Chase & Co., Pentwater Capital Management and York Capital Management, is the primary well-organized group to have expressed an interest in funding an independent exit for the airline’s parent company AMR Corp.

AMR filed for bankruptcy in November 2011, seeking to reduce labor costs.

Entities that gain a controlling equity stake in a company through bankruptcy routinely appoint new boards, and those boards do not necessarily oust the company’s incumbent managers.

But AMR’s current management team, led by Horton who is also chairman of the board, has lost the confidence of the company’s unions, which support a takeover bid by smaller competitor US Airways Group.

The bondholders, who hold more than $700 million in AMR debt, said in the letter to Keith Wilson, president of American’s pilots’ union, its support for an independent exit was “conditioned, among other things, on that plan providing for the naming of a new board of directors.”

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.

American Airlines says seat problem found after grounding planes

FORT WORTH, Texas, Wed Oct 3, 2012 – American Airlines said an internal investigation has revealed improperly installed clamps caused some seats to loosen in six of its aircraft and would inspect the seats in other planes.

On Monday the company said it had temporarily grounded eight aircraft after some seats came loose on two flights.

“Our maintenance and engineering teams have discovered that the root cause is a saddle clamp improperly installed on the foot of the row leg,” the company said in a statement.

The airline, whose parent AMR Corp filed for bankruptcy protection in November, is inspecting all 47 of its 102 Boeing 757 aircraft which have the same type of seat.

The Federal Aviation Administration is aware of the internal review and its findings, the company said.

The airline has already suffered disruptions to its flights due to a long-running labor dispute with its 8,000 pilots, who are expected to authorize a strike this week.

American Airlines, United face trial over Sept. 11 destruction

NEW YORK, Wed Sep 5, 2012 – A U.S. judge ruled that AMR Corp.’s American Airlines and United Continental Holdings Inc. must face trial over claims relating to the September 11 attacks that destroyed the landmark towers of the World Trade Center in New York almost 11 years ago, court documents showed.

In July 2001, two months before the attacks, World Trade Center Properties LLC bought 99-year leases to four World Trade Center buildings from the Port Authority of New York and New Jersey Inc. for $2.805 billion.

In its lawsuit against United Airlines and American Airlines, WTCP said that had it not been for the airlines’ negligence, “the terrorists could not have boarded and hijacked the aircraft and flown them into the twin towers,” on Sept. 11, 2001, according a New York court filing.

The company claimed damages of $8.4 billion from the airlines, the estimated cost of replacing the towers.

Judge Alvin Hellerstein limited the value of WTCP’s destroyed property to $2.805 billion, the price WTCP paid for the leases.

The defendants denied they were negligent, and said the case should not go to trial because WTCP has recovered $4.091 billion from insurance companies.

Judge Hellerstein said at this stage he could not reasonably determine the defendants’ claim that insurance payments received by WTCP covered the damages the company is seeking from them.

“On this record, before trial, I am not able to make such findings,” Judge Hellerstein said in a court filing.

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.

U.S. agency: American Airlines parent will seek to terminate worker pensions

WASHINGTON – The U.S. Pension Benefit Guaranty Corp., which has responsibility for insuring certain benefits under private defined benefit pension plans, said on Tuesday it believes American Airlines will seek to terminate employee pensions in bankruptcy.

The agency said it filed a $92 million lien against American parent AMR Corp. for the balance of unpaid pension plan contributions. It added the lien was applied to AMR assets outside the United States, mainly in Latin America.

American filed for Chapter 11 protection in late November citing uncompetitive labor costs. The carrier has yet to issue a labor cost-savings target.