AMR, US Airways Sign Non-Disclosure Pact Over Possible Merger
The long forecasted merger between AMR Corporation, parent company of American Airlines, and US Airways Group, Inc., may have moved another step closer to becoming a reality. On Aug. 31 two airline companies jointly announced that they have entered into a non-disclosure agreement under which they could exchange certain confidential information about a possible combination.
The agreement also would allow the two carriers to work in close collaboration with AMR's Unsecured Creditors Committee to evaluate a merger. The two airlines also said they have agreed that while they are evaluating a potential combination, they and their representatives will not engage in discussions with other parties concerning a potential combination of AMR and US Airways.
AMR, which is currently operating under Chapter 11 bankruptcy protection, on July 11 had said it was open to considering bids from other groups. Just a few weeks later, however, AMR CEO Tom Horton, speaking at the Global Business Travel Association convention in Boston on July 22, said his airline could emerge from bankruptcy and continue operating independently under current management.
In their statement about the non-disclosure agreement, American and US Airways said they do not expect to provide any further announcements regarding the status of any such discussions “unless and until the parties have entered into a transaction or discussions between the parties have been terminated.” The companies noted that there could be no assurance that a transaction will result from these discussions. Most airline analysts have long seen a combination of AMR and US Airways as the only way AMR could survive as a successful global carrier. That’s also the view of British Airways, American’s partner in the oneworld alliance, which said it may buy a stake in AMR and has supported a merger with US Airways.
Meanwhile, US Airways has already reached an agreement with American’s major labor unions on cost savings if such a merger were to be completed. For its part, American recently has reached an agreement with its flight attendants on a new contract, but American’s pilots rejected a contract proposal asking for concessions. In addition, the American Antitrust Association and the Business Travel Coalition also have questioned any American-US Airways combination on antitrust grounds.
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