Bondholders seek quick decision on American-US Airways merger

Posted Tuesday, Jan. 29, 2013  comments  Print Reprints

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A group of AMR Corp. bondholders with about $1.5 billion in unsecured debt is backing a merger with US Airways Group and pushing for a deal by Feb. 15, people familiar with the matter said.

The bondholders coalesced behind the idea after reviewing confidential data from Fort Worth-based American Airlines and US Airways, said the sources, who asked not to be identified. The promise of more cost savings and other financial benefits from a combined carrier helped sway the group, one source said.

While the group doesn't hold a seat on AMR's unsecured creditors committee, the debt holders' support gives US Airways an ally as it makes the case for a merger that would create the world's largest airline.

Feb. 15 is the expiration date of nondisclosure agreements that the bondholders signed with the two airlines, one source said. Besides giving the debt owners access to proprietary information, the accords restrict them from trading in AMR or US Airways debt, two people said.

Gerard Uzzi, a New York attorney for the bondholders, declined to comment, as did American spokesman Michael Trevino and John McDonald of US Airways.

On Tuesday, The Wall Street Journal reported that AMR's chief executive, Tom Horton, is in talks to become chairman of the merged carrier while US Airways Chief Executive Doug Parker would run the company. Horton could also take a vice chairman or senior adviser position, the Journal said.

AMR's board is meeting this week to discuss the potential merger, and one of the issues likely to be debated is who should run the new carrier.

It is not uncommon in mergers for one CEO to become chairman and the other to run the company. When United Airlines and Continental Airlines merged in 2010, United Chief Executive Glenn Tilton became chairman and Continental Chief Executive Jeff Smisek kept the CEO and president titles. Tilton stepped down at the end of 2012.

The division of equity in a combined airline also remains unresolved, the sources said. AMR has urged that creditors get 80 percent of the equity, while US Airways favors a 70-30 division, another source said.

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