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AA Merger Decision Expected By Year’s End

DALLAS (AP) — AMR Corp.’s bankruptcy creditors expect the parent company of American Airlines to decide by year-end whether to merge with another airline or remain an independent company.

The committee representing AMR’s unsecured creditors made the comment in a footnote to a bankruptcy court filing on Friday.

Since filing for bankruptcy protection in November, AMR management has favored remaining independent. But US Airways has pushed for a merger, and AMR agreed to work with its creditors to consider merger possibilities.

The creditors committee said in Friday’s filing that it “expects that this process will be completed during the current calendar year.” Once AMR and the creditors agree on a strategy for exiting bankruptcy protection, the committee “should be able” to support AMR’s filing of a reorganization plan.

In Friday’s filing, the creditors committee supported new labor contracts between American and its flight attendants and ground workers. It “reluctantly” supported AMR’s decision to offer flight attendants a 3-percent stake in the company and ground workers a 4.8-percent stake even though it could reduce payments to other creditors. A federal bankruptcy judge in New York is expected to approve those contracts next Wednesday.

This week, the same judge approved American’s request to set pay and work rules for pilots, who rejected an offer that would have given them 13.5 percent of the company.

A lawyer for the creditors committee said in open court Tuesday that AMR needed a deal with pilots to complete its reorganization. On Friday the committee made its first written comments on the issue.

The committee said it expects voluntary agreements with all labor groups. But if a deal with pilots isn’t possible, the committee said, AMR could “propose and prosecute” a reorganization plan without one.

Fort Worth-based AMR Corp. filed for Chapter 11 protection in November after losing more than $10 billion since 2001.

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