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Wed, Feb 13, 2013

AA, US Airways Merger Announcement Could Come Thursday

Airline's Boards Expected To Meet Wednesday To Discuss The Marriage

A merger between American Airlines, which has been working its way through bankruptcy for more than a year, and US Airways, which underwent a similar process in 2004, may be announced Thursday, sources close to the discussions said Monday.

The Miami Herald relays a report from the Wall Street Journal that the boards of the two airlines are likely to meet Wednesday to discuss some final details, such as the role AMR Chief Executive Tom Horton would play in the merged company. That role would appear to be limited, and only for a short duration. The title being discussed is "non-executive chairman" for a brief time. The composition of the new board of directors also needs to be resolved.

US Airways has been pursuing a merger with struggling American since January, 2012, and the move is supported by the pilots' and flight attendants' unions. Talking recently to investors, Stern Agee analyst Jeffery Kauffman said that a stand-alone American Airlines would be disadvantaged in terms of infrastructure to compete with other carriers 40 percent larger than the restructured airline.

The bankruptcy court would have to approve the merger deal, which would leave 72 percent of the merged company in the hands of AMR creditors and 28 percent with US Airways stockholders. The estimated value of the merged airline would be about $8.5 billion.

FMI: www.aa.com/i18n/amrcorp/corporateInformation/facts/amr.jsp, www.usairways.com

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