Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

AMR, US Airways evaluating potential merger  Join our daily free Newsletter

MENAFN - Arab News - 01/09/2012

No. of Ratings : 0
Add to Mixx!


(MENAFN - Arab News) American Airlines parent AMR Corp. and US Airways Group Inc. have signed a non-disclosure agreement as they evaluate a potential merger that would create an airline that rivals leader United Continental Holdings Inc. in scope.

The two carriers said yesterday they agreed to share confidential information, work with bankrupt AMR's creditors committee, and not talk to third parties about any terms of their possible combination.

American has also signed non-disclosure agreements with other parties, according to a memo the company sent to managers on Friday. It did not identify the other parties, and a spokesman for AMR declined to elaborate.

Many analysts consider US Airways to be the leading contender for AMR, which filed for Chapter 11 bankruptcy protection in November.

Combined, US Airways and AMR had 37 billion in revenue in 2011, about equal with United Continental, the world's biggest carrier.

American Airlines initially said it would prefer to emerge from bankruptcy on a standalone basis, but has grudgingly responded to pressure from creditors to consider a merger as its best option for competing with United Continental and Delta Air Lines Inc., which are themselves the products of mergers.

A source familiar with the situation said the non-disclosure agreement is fairly restrictive as it prevents US Airways from discussing specific terms of a combination with third parties including labor unions and private equity firms that might be interested in a stake, or other airlines.

US Airways, which declined to comment beyond the news release, has been aggressively campaigning for a merger with AMR. Earlier this year, US Airways won the backing of three unions that represent American ramp workers, pilots and flight attendants by promising to preserve thousands of jobs post-merger.

US Airways, based in Tempe, Arizona, has also reached out to Fort Worth, Texas-based American's creditors and has spoken with US lawmakers about the possibility of a tie-up with American.

In a staff memo yesterday, US Airways Chief Executive Doug Parker said the non-disclosure agreement with American would likely stay in place until a deal has been reached, or talks fail.

"We are pleased to be working directly with American to study a potential merger and we consider this very good news," Parker wrote. He added that the carrier "will not be able to be as open and candid about the discussions with American as we usually are about issues that are important to us."

Shares of US Airways were up 1.7 percent to 10.58 in afternoon trading, while shares of AMR were up 3 percent to 46.6 cents.
Morningstar analyst Basili Alukos said it would be in the best interests of American and US Airways to combine.

"You would have the international operations of AMR and the lower cost structure of US Airways," Alukos said.

Meanwhile, British Airways' parent company International Airlines Group says that it has signed a non-disclosure agreement with American Airlines, allowing it to look at the company's books.

Foreign investors are prohibited from owning more than 25 percent of a U.S. airline. The two airlines already have a joint business agreement for flights across the Atlantic Ocean and were founding members of the OneWorld frequent flier alliance.


  MENA News Headlines




Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help