AMR Considering Merger, Reaches TWU Deal
FORT WORTH (CBSDFW.COM) – AMR, the parent company of American Airlines, is now considering merger options, according a two-page letter to employees from CEO Tom Horton. The announcement came on the same day two work groups from the Transport Workers Union announced that a tentative agreement had been reached with AA on a new contract.
Officials with AMR Corp. previously said outside of considering merger scenarios in discussions with creditors, they had no interest in possible mergers until after bankruptcy proceedings were complete.
The letter sent from Horton though talked of accelerating the plane for the “new” American and stated, “It is at this juncture that it now makes sense to carefully evaluate a range of strategic options, including potential mergers.”
The letter said American will be reaching out to interested parties to tell them how they plan to proceeed. The airline did not specify which companies it would reach out to, or if it included US Airways, labor’s choice for a merger partner.
Allied Pilots spokesman Tom Hoban said American has no choice but to open its books.
“What it really means is an admission of failure with regards to the stand alone plan which the current management team has been advocating for months now,” he said.
KRLD Business Analyst David Johnson explained that, “American Airlines says they will send out packets of material and confidentiality agreements and if they’re returned they will give non-public information to potential suitors — both other airlines and private companies. We’ll see what comes of that.”
Just last week a federal judge approved the request to extend American’s right to propose a reorganization plan from September 28 to December 28.
North Texas bankruptcy attorney Bill Siegel said if the company didn’t consider merger possibilities reorganization would have been impossible.
“This was a way of showing the judge that by extending the time in which they have the exclusive right to file a plan of reorganization that they will explore all viable alternatives, including a merger with US Airways,” Siegel said.
US Airways has been pursuing the possibility of a merger with American since April and had garnered the support of the company’s three unions.
The tentative deal with more than 11,000 maintenance workers and store clerks comes on the heels of a tentative deal with the Allied Pilots. The TWU deal with reduce the number of jobs cuts from 4,300 in that group, to 2,500. Workers will also recevie pay raises of at least three percent.
American spokesman Bruce Hicks said the financial improvement should go a long way toward convincing labor that current management can turn the company around.
“Being successful will have the most important effect on all our employees, on all our stakeholders,” he said.
AMR filed for Chapter 11 protection in November of 2011.
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