By Soyoung Kim and Karen Jacobs
NEW YORK/ATLANTA, Feb 7 (Reuters) - AMR Corp creditors plan
to meet on Monday and could vote on a potential merger agreement
between the bankrupt parent of American Airlines, and US Airways
Group Inc, several people familiar with the matter said.
The two airlines are working to finalize deal terms so the
board of each company could also meet to vote on a merger on
Feb. 11, the same day AMR's unsecured creditors' committee is
scheduled to convene, the people said.
If the parties meet this potential timetable - as currently
envisioned but seen as aggressive - a merger agreement could
come as soon as Tuesday, the people said, asking not to be
identified because the matter is not public.
AMR filed for bankruptcy in November 2011 citing high labor
costs. A combination with US Airways would create the world's
largest airline by passenger traffic and help the two carriers
better compete with rivals United Continental Holdings Inc and
Delta Air Lines Inc.
Discussions are continuing and could still fall apart, they
cautioned. While timing of a deal remains fluid, there is desire
to get it done before Feb. 15, when the confidentiality
agreements AMR bondholders signed are set to expire, the people
familiar with the matter said.
Under terms of the non-disclosure agreements, the group of
influential AMR bondholders is not allowed to trade the
airline's debt, people familiar with the matter have said.
Detailed financial information related to the merger talks
is set to be publicly disclosed on Feb. 15 so that the
bondholders can resume trading without possessing confidential
information. That is putting pressure on all the parties to
reach a deal before then, the people have said.
US Airways, AMR and its creditors are hoping that the
bondholders group will support the deal terms before the parties
announce a merger agreement, the people said.
Representatives of the creditors committee, AMR and US
Airways declined to comment. The bondholder group did not
immediately respond to requests for comment.
FINAL DEAL TERMS
Negotiations in recent weeks have largely come down to a few
major sticking points, including how ownership of the combined
company would be split between shareholders of US Airways and
creditors of AMR, and who will run the merged airline, the
sources have said.
While no final decision has been made, AMR creditors are
expected to receive between 70 percent to 75 percent of the
ownership in the combined company, the people said. US Airways'
formal merger offer made in November proposed that AMR creditors
own 70 percent of the equity and shareholders of US Airways own
the rest.
US Airways may also assume AMR's retiree liabilities
excluding pensions, in the event of a merger, the people
said. The combined airline could take on retiree health and
welfare liabilities, known as Other Post-Employment Benefits
(OPEB), that AMR has been trying to reject through the
bankruptcy process, the people said.
US Airways' original merger proposal had assumed that there
would be no OPEB liability, the people said.
US Airways Chief Executive Doug Parker is widely expected to
become chief executive of the merged airline, while AMR Chief
Executive Tom Horton could become non-executive chairman of the
board for a limited time to allow for a smooth transition, the
sources said.
Horton rebuffed an aggressive takeover push from US Airways
early in the bankruptcy process, saying the airline preferred to
exit court protection on its own and consider a deal later. But
after several months of talks with its own creditors as well as
US Airways, Horton has softened his approach and agreed to
consider all options.
A combined American-US Airways would provide the scale to
match bigger rivals that are upgrading service and expanding
international routes. The merged company would have revenue of
$38.69 billion based on 2012 figures, ahead of United
Continental which had revenue of $37.15 billion last year.
The new American would have a solid presence on the
important U.S. East and West coasts and on North Atlantic
routes, given American's revenue-sharing joint venture with
British Airways and Iberia.
The case is In re AMR Corp et al, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.
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