As American Airlines parent AMR (AAMRQ) works its way out of bankruptcy, the big question has been whether and when the company’s management will agree to a merger with US Airways (LCC), a deal that I’ve argued could be essential to the future of both airlines.
Bloomberg is reporting today that a key constituency — AMR’s bondholders — are have now decided to support a merger:
The bondholders coalesced behind the idea after reviewing confidential data from AMR�s American Airlines�and US Airways, said the people, who asked not to be identified because the talks are private. The promise of more cost savings and other financial benefits from a combined carrier than a stand-alone American helped sway the group, one of the people said.
AMR Corp. has urged that creditors get 80 percent of the equity versus 20 percent for US Airways Group Inc. shareholders, while US Airways favors a 70 percent to 30 percent division, a person said.
While the ad hoc group doesn�t hold a seat on AMR�s unsecured creditors committee, the debt holders� support gives US Airways�an ally as it makes the case for a tie-up that would create the world�s largest airline. AMR said Jan. 3 it expected to decide in weeks to merge or stay independent.
The bondholders are pushing for a resolution before Feb. 15, adds the report. We’ll see if this is going to be enough to persuade AMR CEO Tom Horton to agree very soon to a deal that US Airways has wanted for more than a year. At the least, I’d say the odds of a merger have substantially increased with this news — especially as it comes the day after AMR said it reached agreement with the Transport Workers Union of America over labor terms with the union’s members in the event of a merger.
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