American Airlines' parent is willing to consider merger, CEO says

American Airlines’ parent is willing to consider merger, CEO says

By Hugo Martin

July 11, 2012 12 AM PT

After months of brushing aside talks of a merger, the bankrupt parent company of American Airlines is now willing to consider joining forces with another airline.
In a letter to employees ofAMR Corp., Chief Executive Thomas W. Horton said Tuesday that American Airlines is now in a strong financial position and “it now makes sense to carefully evaluate a range of strategic options, including potential mergers.”

Since the Fort Worth company filed for bankruptcy in November, AMR has rejected calls to join the airline merger trend of the last few years. Delta Air Lines Inc.has completed a merger with Northwest Airlines, United Airlines is nearly finished merging with Continental Airlines, and Southwest Airlines is expected to complete the acquisition of AirTran Airways by 2014.

US Airways Group Inc. in Tempe, Ariz.. has pushed the hardest for a merger with American. In April, US Airways lined up the support of three unions representing 55,000 employees of American Airlines — the Allied Pilots Assn., the Assn. of Professional Flight Attendants and the Transport Workers Union.

In the letter to employees, Horton mentioned the possibility of merging with US Airways but added that “we are arriving at the appropriate point to carefully and objectively evaluate the range of strategic alternatives available.”

AMR reported this week that revenues per seat miles flown increased 8.6% in June from the same month last year. The percentage of seats filled increased to 87.1% in June compared with 85.7% in June 2011.

AMR has the exclusive right until September to file a plan in Bankrutcy Court for its own reorganization. After that, creditors and others may submit reorganization plans for the airline.

Ray Neidl, an airline analyst for Maxim Group in New York, said the only potential snag in a US Airways-American Airlines merger is that the management of US Airways may end up in control of the newly merged airline.

“We are not sure if AMR management is ready to accept that structure,” he said.

Shares of AMR jumped 12.33% to 54 cents Wednesday while shares of US Airways Group increased 1.51% to $14.12.

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