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American Airlines parent hints at possible merger with US Airways

The chief executive of AMR, the parent company of American Airlines, tells employees that a merger with US Airways is among the options being considered.

July 12, 2012|By Hugo Martín, Los Angeles Times

After months of brushing aside talks of a merger, the ailing parent company of American Airlines is now willing to consider joining forces with another airline.

In a letter to employees of AMR, Chief Executive Thomas W. Horton said Tuesday that American Airlines is now in a strong financial position and "it now makes sense to carefully evaluate a range of strategic options, including potential mergers."

Since Fort Worth-based AMR filed for bankruptcy in November, the company has rejected calls to join the airline merger trend of the last few years. Delta has completed a merger with Northwest Airlines, United is nearly finished merging with Continental Airlines, and Southwest Airlines is expected to complete the acquisition of AirTran Airways by 2014.

Tempe, Ariz.-based US Airways Group Inc. has pushed the hardest for a merger with American. In April, US Airways lined up the support of three unions representing 55,000 employees of American Airlines for a potential merger.

In the letter to employees, Horton mentioned the possibility of merging with US Airways but added that "we are arriving at the appropriate point to carefully and objectively evaluate the range of strategic alternatives available."

AMR reported this week that revenue per seat miles flown increased 8.6% in June, compared with the same month last year. The percentage of seats filled increased to 87.1% in June, compared with 85.7% last June.

AMR has the exclusive right until September to file a plan in Bankruptcy Court for its own reorganization. After that, creditors and others may submit reorganization plans for the airline.

Ray Neidl, an airline analyst for New York-based Maxim Group, said the only potential snag in a US Airways-American Airlines merger is that the management of US Airways probably will end up in control of the newly merged airline. "We are not sure if AMR management is ready to accept that structure," he said.

Shares of AMR jumped 12.3% to 54 cents Wednesday, while shares of US Airways Group increased 1.5% to $14.12.

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