AMR Files Bankruptcy-Exit Plan Based on US Airways Merger
By David McLaughlin – Apr 16, 2013 12:01 AM ET
AMR Corp., the parent of American Airlines, filed a plan to exit bankruptcy protection that hinges on creating the world’s largest airline through a merger with US Airways Group Inc. (LCC)
American, based in Fort Worth, Texas, won court approval March 27 to proceed with the combination, which would be completed when the airline exits court protection.
“After evaluating the potential strategic alternatives, it appeared that a business combination with US Airways was the only viable option for American to consider’’ versus emerging from bankruptcy as a standalone company, American said in the filing yesterday in U.S. Bankruptcy Court in New York.
American filed for bankruptcy in Manhattan in November 2011 and announced the deal with US Airways in February, concluding a quest by US Airways Chief Executive Officer Doug Parker for a tie-up. Parker began pursuing American shortly after it sought bankruptcy court protection, wooing creditors and American unions for support.
The deal with Tempe, Arizona-based US Airways caps a wave of consolidation in the industry and will push American past United Continental Holdings Inc. and Delta Air Lines Inc. to be the world’s largest carrier.
The combined company will operate under the American Airlines name. Parker will be CEO, while AMR CEO Tom Horton, whose $19.9 million severance was rejected by U.S. Bankruptcy Judge Sean Lane after opposition from the U.S., will become chairman.
The airline said it was a condition of the bankruptcy plan that Horton receives the compensation and urged the judge to reconsider and approve the payment.
The bankruptcy plan, which sets out how much AMR creditors will recover on their claims, requires creditor support and separate approval from Lane. American has said creditors holding $1.2 billion in unsecured claims have agreed to back the plan and merger.
The case is in re AMR Corp. (AAMRQ), 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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