Wednesday, March 12, 2014
By MARY SCHLANGENSTEIN Bloomberg News
(Continued from page 1)
AMR and US Airways "may be right," said Roger King, a CreditSights Inc. debt analyst. "But they're losing money every day that this doesn't go through."
AMR filed Chapter 11 in November 2011, with $24.7 billion in assets and $29.6 billion in debt. Under the merger plan, unsecured creditors holding $2.6 billion in claims and those with $6.8 billion in claims backed by aircraft will receive a full recovery. Shareholders will get a 3.5 percent stake in the combined company with the potential for additional stock.
"The question is, is there a better potential alternative out there?" said Pablo Wangermann, a Dallas-based consultant at restructuring-advisory firm AlixPartners LLP.
American, which gave up its plan to exit bankruptcy independently when it agreed to the merger, faces the prospect of having to restructure on its own if the government prevails. For US Airways, a failure would follow the 2007 collapse of Parker's bid for Delta Air Lines Inc. in bankruptcy and fruitless merger talks with United Airlines in 2008 and 2010.
A blocked combination would dash the hopes of 100,000 employees -- about 70,000 of them at American -- counting on working at a bigger, competitive airline for better compensation.
"We have had a positive outlook on this whole merger for the last year," said Roger Holmin, president of the Association of Flight Attendants at US Airways. "It's the first time since 9/11 we've been able to have that. Now they are taking that dream away."