LAST week, American announced that it will consider possible merger partners as it goes through the restructuring process in bankruptcy.
It was the call that US Airways Chief Executive Doug Parker has been waiting for.
After months of pushing for a merger with Fort Worth-based AMR Corp., AMR’s CEO Tom Horton asked Parker to meet and discuss the process by which American Airlines will evaluate potential partners. On Thursday, the two had an oatmeal breakfast in Washington, D.C., and chatted about a possible combination.
“It’s the first time he’s reached out,” Parker said during a meeting with the Charlotte Observer later Thursday. “The meeting was polite; not a particular amount of progress made.”
American spokesman Mike Trevino said Horton scheduled the meeting to inform Parker on how the Fort Worth-based carrier intends to review alternatives to its own stand-alone restructuring plan.
“He emphasized that American’s management has an obligation to its own stakeholders, as well as the support of the board and the [unsecured-creditors committee], to pursue the right plan, which includes several interesting options, to deliver the highest value for our financial stakeholders and the best outcome for our people,” Trevino said.
Last week, American announced that it will consider possible merger partners as it goes through the restructuring process in bankruptcy. It said it will send out nondisclosure agreements for potential partners to sign to they can share financial information. American is said to also be considering JetBlue Airways, Alaska Airlines, Virgin America and Frontier Airlines as well as investment partners.
Thursday was the first time the two executives have met to discuss a merger since AMR filed for bankruptcy in November. In an interview in May, Parker said that he called Horton on the day of the bankruptcy filing to congratulate him on his new position as CEO. In subsequent discussions, Horton made it clear that the company intended to focus on restructuring as a stand-alone carrier.
For months, Parker has waged a public campaign advocating a merger. In April, US Airways gained the support of American’s three largest unions and signed conditional labor agreements that would save more jobs for American’s pilots, flight attendants, mechanics and fleet service workers than American had proposed in its bankruptcy term sheets.
American is asking the bankruptcy judge to reject its labor contracts under Section 1113 of the bankruptcy code and allow the carrier to impose concessionary contracts if it cannot reach agreements with unions. The pilots, mechanics and store clerks unions are scheduled to vote on tentative agreements by Aug. 8. U.S. Bankruptcy Judge Sean Lane is scheduled to rule Aug. 15.
Parker told the Charlotte Observer that he remains concerned that American will seek to drag out the merger while planning to remain independent.
“We’re happy to hear there’s a process, but we’d like to know what is the process,” he said. “If their desire is to just get through the bankruptcy process and emerge stand-alone, that’s what we’re a little worried about. ... You could, for example, get to a point where the stand-alone plan is almost done and you haven’t done a lot of work on the merger.”
Separately, at a court hearing Thursday, Lane approved AMR’s request to extend its exclusive period to file a reorganization plan by an additional three months to Dec. 28. AMR’s request had the support of the unsecured-creditors committee.