US Airways Shares Slip Despite Merger Chance, Strong Demand

[PullUp]

The judge doesn't side with anyone. The judge doesn't care about whining and moaning. He does interpret law and ensure it is fairly applied.
I'm sorry if your distorted view is that the whole process is governed by money but this is a corporate restructuring where the intention is to return the company to a viable place. US laws do heavily side with business but they do not have carte blanche freedom to do as they please and steamroll over everyone else in the process.
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Of course what you and many others want is for Doug Parker's borrowed money will be more powerful than AA's creditors (of which labor does represent a significant portion).
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You and others at US will have to figure out your plan Z but there will be no one biting on any plan that involves a US takeover of AA.
The sooner you start dealing with that reality, the easier it will be to handle when you ultimately have to accept it.

The judge will do what is in the best interests of the stakeholders. Sorry guys, employees and/or their unions are not included in this group. Y'all just the hired help. Don't like it? Quit.
Respecting law and fairness are all very lofy sound bites, but the judge will not take your personal wellbeing into account. All the money boys will come up with a plan. The judge will rubber stamp it and make it official and legal. You will cry, cuss, and pull out your hair. But nobody cares, especially the judge.
Next case.

 

[jimntx]

And, you think the judge will find that merging AA with US will be in the best interests of who? You are barely making a profit. I don't think our execs know how to spell the word. Exactly how would the "money boys" that you think rule the situation make a profit out of merging two messes? Two messes do not make a strong airline. They make one BIG mess.

Also, you forget that the AA guys have access to those same money boys. Why would the execs at AMR walk away and leave Doug in charge when they could get the money boys to fund their continued reign? Hey, maybe AMR will buy US and ground all Airbus a/c, close all duplicate stations, and lay off the US employees affected by these actions. That would reduce capacity in the industry nicely.

 

[USA320Pilot]

AMR Chief Racing Against the Clock

By SUSAN CAREY And JACK NICAS

CHICAGO (WSJ.com) - American Airlines parent AMR Corp. fears that an extended stay in bankruptcy-court protection heightens the risk of being taken over or broken up, Chief Executive Tom Horton said in an interview.

"Any of those things could happen," said Mr. Horton, a longtime AMR executive who took the top job the day the company filed for bankruptcy nearly four months ago. "Break up the company, sell off the parts, a combination where someone acquires the company in a way that is not advantageous to our people." The CEO didn't rule out a deal once the company emerges from bankruptcy.

AMR Chief Tom Horton is pushing for $1.25 billion in labor concessions.

Mr. Horton said he thinks AMR could emerge from Chapter 11 by the end of this year. While that would be "an aggressive schedule," he said, "what I've said to our team is, 'Let's get out of this as fast as we can. Nothing good happens in bankruptcy and the longer we wait, the more opportunity there is for an outcome that is not good for our company.' "

AMR is pressing its labor unions to accept concessions it says are essential to cutting its costs and returning to profit. Mr. Horton, in Chicago to visit supplier Boeing Co. BA +0.27%and American Airlines employees at O'Hare International Airport, said AMR's turnaround plan "is a really good one...But it's not inevitable."

He said he hammers home that message when he travels the country, meeting employees in crew rooms, cockpits and galleys, telling them, "We must move forward." AMR's labor unions have expressed dismay at the size of the cuts and negotiations are moving slowly.

Mr. Horton said AMR's business plan will be robust enough to attract investors to commit the capital needed to cover its underfunded pension obligations. He said investors will likely include existing creditors and possibly private-equity and hedge funds.

The Fort Worth, Texas, company aims to increase revenue by $1 billion a year, partly by increasing flights from its five most important U.S. cities and strengthening its relations with overseas partners. While AMR foresees "modest reductions" in capacity this year, Mr. Horton said, it plans to add 20% more flights from those five cities—New York, Chicago, Miami, Dallas and Los Angeles—by 2017.

Contrasting AMR's plans for growth with bigger capacity cuts at other airlines that went through bankruptcy, the 50-year-old CEO said those efforts were "about shrinkage and mergers," while AMR's "is about renewal and growth."

Most other big U.S. carriers already have combined. Delta Air Lines Inc. DAL +3.55%merged with Northwest Airlines in 2008. United Airlines and Continental Airlines married in 2010. United Continental Holdings Inc. UAL +4.99%now is the world's largest airline by traffic and Delta is No. 2, while American is a distant third. AMR is seen as the last opportunity for a tie-up.

US Airways Group Inc., LCC +6.91%itself the product of a 2005 merger with America West Airlines, has hired investment and legal advisers to help it assess a possible combination with AMR. Delta is studying options that could include buying AMR or going after US Airways, people familiar with the matter have said.

Mr. Horton said AMR isn't interested in merger opportunities while it is in bankruptcy-court protection. "Contemplating a merger in the middle of a complex restructuring is like running a marathon with a backpack on. You just wouldn't do it."

But once the airline emerges in good health, he said, "I think there are ample opportunities to consider combinations, and we would not dismiss that. Consolidation has been good for the industry."

Mr. Horton extolled AMR's business plan, which some analysts and investors have criticized for being too similar to its failed 2009 turnaround effort. He said the new plan will be bolstered by an ambitious fleet overhaul, increased revenue from new joint ventures with Japanese and European partners and $2 billion in annual cost-savings.

Of that, American's employees are being asked for $1.25 billion in concessions that include the elimination of 13,000 jobs and requirements that pilots and flight attendants fly more hours per month. AMR intends next week to tell employees at its American Eagle regional subsidiary what cuts it intends for them.

Denise Lynn, vice president of employee relations, said "there's still a fairly significant gap between the proposals the unions have made to us and the $1.25 billion we need to achieve."

If no agreements can be reached soon, AMR has said it will petition the bankruptcy judge to let it abrogate existing labor contracts and impose changes. "There's not an unlimited amount of time," Mr. Horton added.

AMR last week backed off a controversial labor concession it had been insisting on, agreeing to freeze three of American's four underfunded employee pension plans. It had planned to terminate all four.

Mr. Horton said Thursday that the about-face was a response to its creditors committee, which includes three unions, the federal Pension Benefit Guaranty Corp., Boeing and banks representing bondholders.

Creditors didn't want their claims to be diluted by the PBGC, which would take on a $9 billion liability in assuming the four plans and become AMR's largest creditor.

The fate of the fourth pension plan, covering American pilots, is uncertain, but the company and the pilots union are trying to find a way to freeze it. Freezing plans means that retirees and employees will receive all the benefits they have accrued so far, and future pension benefits would come in the form of 401(k)-type plans.

Because AMR compromised on the pension issue, the company must raise outside capital to fund the remaining pension shortfalls in the frozen plans. Mr. Horton said declined to estimate how much the company may seek.

 

[BoeingBoy]

"He said investors will likely include existing creditors and possibly private-equity and hedge funds."

Can anyone say "TPG"?

Jim

 

[WorldTraveler]

AMR Chief Racing Against the Clock



Creditors didn't want their claims to be diluted by the PBGC, which would take on a $9 billion liability in assuming the four plans and become AMR's largest creditor.

The fate of the fourth pension plan, covering American pilots, is uncertain, but the company and the pilots union are trying to find a way to freeze it. Freezing plans means that retirees and employees will receive all the benefits they have accrued so far, and future pension benefits would come in the form of 401(k)-type plans.

Because AMR compromised on the pension issue, the company must raise outside capital to fund the remaining pension shortfalls in the frozen plans. Mr. Horton said declined to estimate how much the company may seek.

... which validates what I have said that DL and NW's decision to keep their pension plans increased the return for their creditors but also set the "new norm" for airline BKs as keeping the pension plans.
If AA keeps its pension plans in a frozen state, it increases the burden on US should it attempt to acquire them and further highlights the financial dfferences between AA and US

 

[USA320Pilot]

CEO: American Airlines open to merger, but not right away

Click here to read the story.

 

[USA320Pilot]

"He said investors will likely include existing creditors and possibly private-equity and hedge funds."

Can anyone say "TPG"?

Jim

In my opinion, based on history, it would not surprise me to see John Luth and the Seabury Group are involved again.

 

[AAviator]

In my opinion, based on history, it would not surprise me to see John Luth and the Seabury Group involved again.

LOL! selective memory?

 

[BoeingBoy]

In my opinion, based on history, it would not surprise me to see John Luth and the Seabury Group involved again.

They don't fund, they seek sources of funding - and they're not on the list of advisors that AA has hired. Note that Horton isn't talking about a merge in bankruptcy, or even in the US/HP model as the POR for bankruptcy exit. He's talking about funding the obligations of frozen DB plans in order to exit bankruptcy on it's own. Something like that would be right up TPG's alley - money for a significant share of the "new" AA. That's what TPG did in the case of HP, BTW.

Jim

 

[USA320Pilot]

They don't fund, they seek sources of funding - and they're not on the list of advisors that AA has hired. Note that Horton isn't talking about a merge in bankruptcy, or even in the US/HP model as the POR for bankruptcy exit. He's talking about funding the obligations of frozen DB plans in order to exit bankruptcy on it's own. Something like that would be right up TPG's alley - money for a significant share of the "new" AA. That's what TPG did in the case of HP, BTW.

Jim

TPG is not necessarily labor friendly.

 

[USA320Pilot]

American Airlines open to merger, CEO hints

Click here to read the story.

USA320Pilot comments: Social issues and egos are difficult merger obstacles. I believe Tom Horton may want to run AMR post bankruptcy, which may be why he signaled to the creditor's committee, investors, and analysts he is open to a merger, if AMR is the surviving business entity/management team team after a successful "formal reorganization."

I believe the WSJ's comments and Horton's thoughts are correct when the Journal wrote, American Airlines parent AMR Corp. fears that an extended stay in bankruptcy-court protection heightens the risk of being taken over or broken up, Chief Executive Tom Horton said in an interview. "Any of those things could happen," said Mr. Horton, a longtime AMR executive who took the top job the day the company filed for bankruptcy nearly four months ago. "Break up the company, sell off the parts, a combination where someone acquires the company in a way that is not advantageous to our people."

 

[AAviator]

American Airlines open to merger, CEO hints

Click here to read the story.

USA320Pilot comments: Social issues and egos are difficult merger obstacles. I believe Tom Horton may want to run AMR post bankruptcy, which may be why he signaled to the creditor's committee, investors, and analysts he is open to a merger, if AMR is the surviving business entity/management team team after a successful "formal reorganization."

I believe the WSJ's comments and Horton's thoughts are correct when the Journal wrote, American Airlines parent AMR Corp. fears that an extended stay in bankruptcy-court protection heightens the risk of being taken over or broken up, Chief Executive Tom Horton said in an interview. "Any of those things could happen," said Mr. Horton, a longtime AMR executive who took the top job the day the company filed for bankruptcy nearly four months ago. "Break up the company, sell off the parts, a combination where someone acquires the company in a way that is not advantageous to our people."

Business acumen and financial literacy escape you. Whereas ego and fantasy appear to have a firm grip.

Still waiting for a cognitive response from you in the other thread....

 

[crazystnic]

CEO: American Airlines open to merger, but not right away

Click here to read the story.

Kirby says labor must be on board.

AA will not be on board and I hope USAPA is not on board either until they get us a contract that is in line with industry.

 

[AAviator]

Interesting point.

With such a steep climb in labor costs, coupled to a network that has the highest consolidated operating costs in the marketplace, how does this help the LCC argument that they would be an asset in a merger?

Beuller?





Beuller?

 

[PullUp]

And, you think the judge will find that merging AA with US will be in the best interests of who? You are barely making a profit. I don't think our execs know how to spell the word. Exactly how would the "money boys" that you think rule the situation make a profit out of merging two messes? Two messes do not make a strong airline. They make one BIG mess.

Also, you forget that the AA guys have access to those same money boys. Why would the execs at AMR walk away and leave Doug in charge when they could get the money boys to fund their continued reign? Hey, maybe AMR will buy US and ground all Airbus a/c, close all duplicate stations, and lay off the US employees affected by these actions. That would reduce capacity in the industry nicely.

First, I never said merging with US was a good idea. I said that employees have no input. Don't believe anything management tells you, because they don't have control either. Everything now is being decided in some back room by a few very powerful people with a lot of cash that want to turn that pile into a bigger pile, and take most of it out of your pocket.
New airplane orders can and will be cancelled. Promises or contracts with employees can and will be abrogated. It has nothing to do with what your management wants or what your employees want. The control is in the hands of the guys with the $$. And, although the judge may look official, he's just there to rubber stamp the plan and make it all legal.
Enjoy the ride. I've been on a couple of them. It's no fun, I know. Best of luck.