With deal, Chap­ter 11 could end in early ’13

Amer­i­can

Austin American-Statesman - - BUSINESS - Con­tin­ued from B

per­cent of its mem­bers voted to rat­ify a new con­tract three months af­ter they re­jected a sim­i­lar of­fer. Union lead­ers lob­bied hard for pas­sage the sec­ond time around.

Union of­fi­cials and an­a­lysts say the vote gives AMR cred­i­tors cer­tainty about the com­pany’s la­bor costs, mak­ing it eas­ier for them to weigh which gives them more money — Amer­i­can on its own, or get­ting big­ger through a merger with US Air­ways. Amer­i­can’s unions sup­port a merger.

“This con­tract rep­re­sents a bridge to a merger with US Air­ways,” said pi­lots’ union spokesman Dennis Ta­jer. He said the vote “should not in any way be viewed as sup­port for the Amer­i­can stand- alone plan or for this cur­rent man­age­ment team.”

Amer­i­can also hailed the vote as a key step in its turn­around af­ter years of heavy losses.

In a mes­sage to em­ploy­ees af­ter the vote, Hor­ton called the con­tract with pi­lots an im­por­tant mile­stone and said the com­pany was near­ing the end of re­struc­tur­ing.

Hor­ton said AMR was also wrap­ping up work on whether to re­main in­de­pen­dent or merge with US Air­ways. He said he was “still eval­u­at­ing” the mer­its of a merger.

US Air­ways de­clined to com­ment, cit­ing a con­fi­den­tial­ity agree­ment with Amer­i­can when talks be­gan sev­eral weeks ago.

AMR and Amer­i­can filed for bank­ruptcy pro­tec­tion in Novem­ber 2011. With the pi­lots’ deal, the com­pany could exit Chap­ter 11 early next year, faster re­or­ga­ni­za­tion than those in the last decade at United and Delta.

Fri­day’s vote filled in the last un­known piece in AMR’s la­bor-cost puz­zle. The com­pany’s cred­i­tors “very much wanted a con­tract be­cause they want some vis­i­bil­ity on what the cost struc­ture will be,” said Ray Neidl, an air­line an­a­lyst for Maxim Group PLC.

US Air­ways has pro­posed a merger that would give AMR cred­i­tors 70 per­cent of the com­bined com­pany, to be run by US Air­ways Group CEO Doug Parker, ac­cord­ing to a per­son fa­mil­iar with the dis­cus­sions who spoke on con­di­tion of anonymity be­cause talks are pri­vate.

There have been re­ports that AMR might seek up to 80 per­cent for its cred­i­tors, which could be un­ac­cept­able to US Air­ways share­hold­ers, the per­son said. Last month, a com­mit­tee of bond­hold­ers told the pi­lots’ union they would only sup­port an in­de­pen­dent Amer­i­can if AMR had a new board that would pick man­agers to run the air­line.

Amer­i­can has about 7,500 ac­tive pi­lots plus a few hun­dred oth­ers on fur­lough.

The six-year con­tract will raise pay by 4 per­cent on sign­ing and 2 per­cent per year af­ter that, with an ad­just­ment in the third year to bring pay in line with other big air­lines.

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