Pace Quickens on American-US Airways Merger Negotiations

By Paul Riegler on 29 January 2013
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AA Super 80 at LaGuardia Airport

AA Super 80 at LaGuardia Airport

Negotiations between American Airlines and US Airways about a merger that would create the world’s largest airline are progressing according to multiple reports.

The talks center around who would run the company should a merger take place and financial terms, specifically what percentage American’s creditors and US Airways shareholders would receive.

Neither issue is close to resolution and both are key issues that need to be resolved before a merger announcement could take place.

Doug Parker, CEO of US Airways, is viewed by many as the leading candidate for CEO of the merged airline and American’s CEO, Tom Horton, is reportedly in discussions with creditors and the airline’s directors about becoming chairman of the board.  Right now both roles are held by Horton.

A merger would create the world’s largest airline by passenger traffic.

American’s bondholders representing over $2 billion in debt have reportedly said they would support a merger provided that the financial terms of the deal were acceptable to them.

US Airways initially proposed giving 70% to American’s creditors in November but that figure is viewed as insufficient by bondholders.  Other remaining issues include the composition of the merged airline’s board of directors and who controls their appointment.

The bondholders’ non-disclosure agreements expire mid February so a decision one way or the other is likely to come before then.  American has also prepared a standalone restructuring plan that is under consideration but the momentum for the merger seems to all but rule that out unless negotiations collapse.


Accura News

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