AMR Nears Bankruptcy Exit as Creditors Approve US Airways Merger
Stock Chart for AMR Corp (AAMRQ)
American Airlines won creditor approval for its plan to exit bankruptcy protection by merging with US Airways Group Inc. (LCC) to create the world’s largest carrier.
Preliminary results showed at least 88 percent of ballots in each creditor class were cast for the plan, representing more than 97 percent of the claim value in each group, parent AMR Corp. (AAMRQ) said today in a statement. More than 99 percent of AMR shareholders voted for the plan, the company said.
The vote moves Fort Worth, Texas-based American closer to completing the merger with Tempe, Arizona-based US Airways. The carriers reached the deal in February and are awaiting approval from the Manhattan federal court overseeing AMR’s bankruptcy and from the U.S. Justice Department, which is assessing whether the combination will create a monopoly in any markets. They are also awaiting word from European Union antitrust authorities.
“This is another important milestone toward our launch of the new American,” Chief Executive Officer Tom Horton said in the statement. He will serve a limited term as chairman of the merged airline.
Final voting results will be certified and filed with the bankruptcy court before an Aug. 15 hearing.
The combined airline, which will operate under the American name, will displace United Continental Holdings Inc. (UAL) as the world’s largest carrier based on passenger traffic, and will operate more than 6,700 daily flights.
“We are focused on getting the merger completed and closed,” US Airways Chief Executive Officer Doug Parker said on a July 24 conference call. “That’s going very well.”
He reiterated the airline’s expectation that the merger will close this quarter.
US Airways shareholders, who will own 28 percent of the combined carrier, approved the $11 billion, all-stock merger on July 12. The remaining 72 percent will go to AMR creditors, employees and shareholders.
Unsecured creditors with $2.6 billion in claims against American will receive a full recovery, according to court papers.
The combined airline’s position at Reagan National Airport in Washington, where the number of flights is limited, has been the focus of objections from competitors such as JetBlue Airways Corp. and Southwest Airlines Co.
The case is In re AMR Corp., 11-bk-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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