Reuters<\/em> reported.<\/p>\nDetails of the proposal emerged as American Airlines pilots voted to ratify a new union contract on Friday, ending a years-long labor dispute and stabilizing the carrier as it tries to emerge from bankruptcy.<\/p>\n
Under an all-stock merger that US Airways proposed in mid-November at a meeting with AMR\u2019s unsecured creditors committee, AMR creditors would own 70 per cent of the merged company and US Airways shareholders 30 per cent, the people said.<\/p>\n
US Airways and AMR are negotiating toward a potential merger agreement that the smaller rival hopes could come as soon as January, one of the people added, asking not to be named because the matter is not public.<\/p>\n
The combined AMR and US Airways could have a value similar to Delta Air Lines Inc, which has a market capitalization of around $8.5bn, the person said.<\/p>\n
At the same time, AMR is still pursuing a plan to emerge from bankruptcy proceedings as an independent airline, which will be compared against the merits of a merger with US Airways, the people said.<\/p>\n
The companies have yet to narrow differences on a number of significant issues before any deal could be agreed, including how much of the combined carrier each side should own, the people said.<\/p>\n
AMR creditors think they should get an equity stake of closer to 80 percent in a merged entity, rather than the 70 per cent proposed by US Airways, the people said. AMR and US Airways also disagree on potential cost and revenue benefits from a merger as well as labor integration challenges, they added.<\/p>\n
In a note to American Airlines workers, AMR CEO Tom Horton said the company is weighing whether a merger could \u201ccreate value for our owners and a positive outcome for our people and our customers. We expect to have a conclusion on this soon.\u201d<\/p>\n
Representatives of US Airways and the creditors committee declined to comment. The Wall Street Journal reported details of US Airways\u2019 proposal earlier on Friday.<\/p>\n
The new labor contract, approved by nearly three-quarters of the AMR pilots who voted, gives the Allied Pilots\u2019 Association a 13.5 per cent equity stake in AMR and offers what the union sees as a path to \u201cindustry-standard\u201d pay, union spokesman Dennis Tajer told Reuters<\/em>.<\/p>\nAMR filed for bankruptcy in November 2011, primarily due to high labor costs, and said it needed to cut those costs by $1bn a year. It achieved concessions from its ground workers and flight attendants but remained at odds with pilots in bitter labor talks that date to 2006.<\/p>\n
AMR creditors had deemed labor peace a major priority, saying uncertainty over contracts could make it difficult for creditors and potential investors to assess the company\u2019s post-bankruptcy viability.<\/p>\n
Friday\u2019s vote could be seen as addressing that concern and providing AMR a clearer path toward exiting Chapter 11.<\/p>\n
The pilots had been working under strict labor terms imposed unilaterally by AMR as part of its bankruptcy process while negotiations dragged on. The pilots struck down a previous contract offer in August, which at the time AMR had framed as its \u201clast, best\u201d offer.<\/p>\n
How the company will look when it exits bankruptcy is still unclear. The pilots\u2019 union says it has lost faith in AMR management, led by Horton, and strongly supports a US Airways takeover.<\/p>\n
\u201cThis ratified agreement should not in any way be viewed as support for the American standalone plan or for this current management team,\u201d Tajer said. \u201cThis contract represents a bridge to a merger with US Airways.\u201d<\/p>\n
<\/p>\nFollow this link:
\nUS Air makes merger offer<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"US Airways Group Inc has made a formal merger proposal to American Airlines parent AMR Corp and its creditors that could value the combined airline at around $8.5bn, two people familiar with the matter said on Friday, Reuters reported. Details of the proposal emerged as American Airlines pilots voted to ratify a new union contract on Friday, ending a years-long labor dispute and stabilizing the carrier as it tries to emerge from bankruptcy. Under an all-stock merger that US Airways proposed in mid-November at a meeting with AMR\u2019s unsecured creditors committee, AMR creditors would own 70 per cent of the merged company and US Airways shareholders 30 per cent, the people said. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-237919","post","type-post","status-publish","format-standard","category-business"],"yoast_head":"\n
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