AMR CEO Said to Tell Suitor He Won’t Be Rushed on Deal
The exchange occurred today during a breakfast meeting between the two executives at a Washington hotel, said the people, who declined to be identified because the discussion was private. Horton reached out to Parker by e-mail yesterday to suggest the session, one of the people said.
American’s CEO outlined how a review of alternatives to its own plan to emerge from bankruptcy independently will work and what criteria the company will apply, Mike Trevino, a spokesman for American parent AMR Corp. (AAMRQ), said in an e-mailed statement.
Horton emphasized to Parker today that American has an obligation to “pursue the right plan, which includes several interesting options, to deliver the highest value for our financial stakeholders and the best outcome for our people,” Trevino said.
US Airways, which failed in earlier bids to combine with Delta Air Lines Inc. and United Airlines, has lobbied American creditors to build support for a merger since securing tentative contract agreements with the Fort Worth, Texas-based carrier’s unions. US Airways said last week that it bought AMR debt to become an official creditor in the bankruptcy.
“The fact that AMR is engaging is positive,” said Matthew Jacob, an analyst with ITG Investment Research in New York. “There is pressure from a lot of different angles for AMR to consider this, and it’s something that AMR is wise to at least consider. Both these companies and management teams are trying to feel each other out.”
US Airways said “no substantial progress” was made in today’s meeting, which occurred a day after Parker warned in a speech that US Airways’ interest in a merger with American isn’t infinite.
“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,” John McDonald, a US Airways spokesman, said in an e-mailed statement.
US Airways tumbled 6.9 percent to $12.50 at 4:15 p.m. in New York, the largest decline in more than a month. The shares have still more than doubled this year.
AMR’s 6.25 percent bonds due in October 2014 jumped 3.25 cents, or 4.9 percent, to 69.75 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The judge overseeing American’s bankruptcy today extended until Dec. 28 the airline’s exclusive right to file a reorganization plan. While Horton originally said he didn’t want to consider a merger until leaving bankruptcy, the airline said July 11 it’s ready to review that and other options.
Parker, in remarks yesterday to the National Press Club, said Tempe, Arizona-based US Airways is the only partner that can solve American’s network deficiencies. He first began pressing for a merger in January. The combination would pass United Continental Holdings Inc. as the world’s biggest airline, based on passenger traffic.
American’s second-quarter performance, including record quarterly sales of $6.45 billion, reflects the strength of its route network and revenue-sharing alliances outside the U.S., Horton said. Those are parts of American’s plan to complete its bankruptcy on a stand-alone basis.
The Wall Street Journal reported the meeting earlier today.
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