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VOL. 36 | NO. 28 | Friday, July 13, 2012




CEOs of American Airlines, US Airways discuss merger options

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DALLAS (AP) — The CEOs of American Airlines parent AMR Corp. and US Airways met over breakfast Thursday to talk about potential merger scenarios.

AMR's Thomas Horton told US Airways' Doug Parker that he won't be rushed into any deals and will methodically compare all offers against AMR's plan for remaining independent, said a person familiar with the discussion. This person spoke on condition of anonymity because details of the meeting haven't been made public.

US Airways Group Inc. said it hoped the meeting was the start of a process in which it can show the benefits of a merger between the two airlines.

Parker has conducted an unusually public campaign for a merger that would presumably result in a new company led by US Airways' management. He won the support of American's labor unions, which signed conditional labor contracts that would take effect if there is a merger. Many Wall Street analysts think a merger is the best way for American to grow and compete with bigger rivals United and Delta.

But Horton has preferred to work on cutting costs and making AMR profitable before it emerges from bankruptcy protection, then consider mergers. The CEO wants to cut annual spending by $2 billion a year — it was $25 billion last year — with more than half coming from labor.

AMR filed for bankruptcy protection in November.

Horton called Parker on Wednesday and set up a breakfast meeting for Thursday in Washington. There, Horton told Parker that AMR will complete its plan to reorganize as a stand-alone company and will consider alternatives including merging with another airline, said the person familiar with the meeting.

Horton said that in the next few weeks AMR would send nondisclosure agreements to airlines or other parties that might be interested in a merger or investment, the person said. They would need to sign the agreements to get nonpublic information about AMR's finances.

The person declined to say how many parties would get the merger-chat invitations, and added that Horton said the list could grow as AMR's financial strength improves.

This week, AMR reported a narrower second-quarter loss than a year ago and would have earned $95 million excluding restructuring costs — its first operating profit for the quarter since 2007.

US Airways spokesman Andrew J. Christie Jr. said the company was pleased the meeting took place.

"No substantial progress was made," he said, "but we hope this is the start of a meaningful, fair and transparent process that will give us the ability to demonstrate further why combining American Airlines and US Airways is in the best interests of all of our stakeholders, many of whom have already voiced their support for this merger."

Horton and Parker have known each other since the mid-1980s when both men worked at American. In a speech at the National Press Club on Wednesday, Parker said there was nothing personal about his pursuit of Horton's company.

"Tom and I are friends, have been friends for a long time," Parker said. "Hopefully when this is over we will remain friends."

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