AMR Regional-Jet Order Delayed as Suit Imperils FinancingMary Schlangenstein and Christiana Sciaudone
American Airlines said a pending order for larger regional jets has been delayed as a U.S. lawsuit seeking to stop the merger with US Airways Group Inc. puts financing for the deal at risk.
An agreement to buy a “substantial” number of planes was near when the U.S. Justice Department sued to block the US Airways deal on Aug. 13, AMR Corp.’s American said in a court filing that didn’t specify its supplier. Embraer SA said in July that it was in talks for an order of 76-seat jets.
Bigger, more-fuel efficient regional aircraft are part of Fort Worth, Texas-based American’s plan to cut operating costs by shedding models with 50 or fewer seats after exiting bankruptcy via the US Airways merger. Backstop financing from the manufacturer and favorable export credit funding are only available upon leaving court protection, the airline said.
“Any alternative financing for a company still in bankruptcy would almost certainly be under considerably less favorable terms, and would result in additional costs to American,” the airline said yesterday in the filing.
Michael Trevino, an American spokesman, declined to confirm a pending order with Sao Paulo-based Embraer. Calls left with Embraer after regular business hours in Brazil weren’t immediately returned.
American and Tempe, Arizona-based US Airways expected to close their merger by the end of September before the U.S. lawsuit was filed. Deliveries of new regional jets were due to start as soon as June.
The judge overseeing American’s bankruptcy today delayed a final ruling to approve its plan to exit Chapter 11 protection by combining with US Airways. The merger, which would create the world’s biggest carrier, was challenged by U.S. antitrust regulators who say it would hurt consumers by raising fares.
The airlines have asked for a mid-November start for the antitrust trial, while the U.S. Justice Department wants the case to begin in March. A hearing to set a trial date is planned tomorrow.
The case is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia (Washington).