AMR creditors prefer all-stock merger with US Airways: sources

Wed Dec 12, 2012 8:38pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Soyoung Kim

NEW YORK (Reuters) - American Airlines creditors want a potential merger with US Airways Group Inc LCC.N to be an all-stock deal rather than one that pays some claims in cash, three people familiar with the matter said, in a move that underscores confidence in a merged airline.

The creditors of American Airlines parent AMR Corp AAMRQ.PK want to capture the full upside from a combination if the airline chooses to emerge from bankruptcy in a merger with its smaller rival, the people said this week.

Creditors in bankruptcy often want at least part of their claims paid in cash, rather than in the stock of a reorganized company with an uncertain trading value.

AMR creditors' preference for an all-stock deal could be seen as a vote of confidence in the proposed merger and the potential revenue and cost benefits from a deal that would create one of the world's largest airlines.

US Airways, in hot pursuit of its bigger rival all year, sounded out AMR creditors about how they wanted to be paid off before proposing a formal all-stock merger proposal at a meeting with the creditors committee in November, the people said.

The merger discussions among US Airways, AMR and its creditors are at an advanced stage, with a decision on whether to pursue a combination or emerge as an independent company expected as soon as January, they said.

The people asked not to be named because the matter is not public. Representatives for the creditors committee did not immediately respond to requests for comment.

AMR management prefers to exit bankruptcy as an independent airline, but events since US Airways made a formal merger offer last month indicate a deal looks more likely than before.   Continued...

A US Airways plane passes American Airlines planes at Ronald Reagan National Airport in Washington April 23, 2012. REUTERS/Kevin Lamarque