US Air, AMR near $11 billion merger, deal seen within week : sources

Sun Feb 10, 2013 3:59pm EST
 

By Soyoung Kim

NEW YORK (Reuters) - US Airways Group Inc LCC.N and AMR Corp AAMRQ.PK are nearing an $11 billion merger that would create the world's largest airline and could announce a deal within a week, after resolving key differences on valuation and management structure, people familiar with the matter said.

Under terms of a deal that are still being finalized, US Airways Chief Executive Doug Parker would become CEO, while AMR's Tom Horton would serve as non-executive chairman of the board until spring of 2014, when the combined company holds its first annual meeting, the sources said.

The deal would come more than 14 months after the parent of American Airlines filed for bankruptcy in November 2011, and would mark the last combination of legacy U.S. carriers, following the Delta-Northwest and United-Continental mergers.

The all-stock merger is expected to value the combined carrier at between $10.5 billion and $11 billion, and would give AMR creditors 72 percent of the ownership in the new company and US Airways shareholders the rest, they said.

The board of each airline is expected to meet in the middle of the coming week to vote on the proposed deal, and an announcement would likely come in the latter part of the week, the sources said, asking not to be named because the matter is not public.

Negotiations are continuing and could still be delayed or fall apart, they cautioned.

The companies had initially tried to schedule board meetings for Monday, the day that AMR's creditors committee planned to convene, and had aimed to announce a deal as soon as Tuesday, sources told Reuters previously.

But AMR needed more time to finalize details and the boards of the two airlines are now not expected to gather until around Wednesday, the sources said.   Continued...

 
An American Airlines plane (C) is seen between two US Airways Express planes at the Ronald Reagan Washington National Airport in Arlington County, Virginia, February 10, 2013, as negotiations continue this week between parent companies US Airways Group Inc and AMR Corp on a possible $11 billion merger, creating what would be the world's largest airline. REUTERS/Mike Theiler (UNITED STATES - Tags: TRANSPORT BUSINESS)