Court Extends AMR Exclusivity Until December
Published: July 20, 2012
American Airlines’ bankrupt parent AMR won court approval on Thursday to extend until December 28 its exclusive right to present a plan to emerge from bankruptcy.
Judge Sean Lane granted the request, which was supported by AMR’s creditors’ committee, at a hearing in US Bankruptcy Court in Manhattan. The current exclusivity period was to have run out in September.
AMR went bankrupt in November, citing an untenable labour cost structure.
The extension, which blocks creditors from pushing their own proposals on how AMR should restructure its debt, comes amid efforts by US Airways to merge with AMR and as the latter prepares to review strategic options for its emergence from bankruptcy.
Extending the exclusivity period does not kill the prospect of a merger in bankruptcy. At the behest of its creditors, AMR is considering merger partners as part of its restructuring, and the sides could still negotiate a consensual merger deal during bankruptcy.
AMR chief executive Tom Horton met US Airways chief executive Doug Parker early on Thursday, and assured his counterpart that AMR’s strategic review process would be “objective” and “fact-based” and that there was no pre-determined outcome, according to people familiar with the matter.
Horton said during the meeting that the company was obligated to pursue a plan that achieves the highest value for its financial creditors and will take the necessary time to run the process, the people said. They asked not to be named because the meeting was not public.
According to a statement from AMR, Horton told Parker the company must choose “the right plan,” and that there were “several interesting options” for how the company could restructure.
Many industry analysts consider US Airways the leading contender for a merger, but sources have said that AMR is also speaking to other carriers and investors about a potential tie up.
US Airways recently acquired a piece of AMR debt, making it a creditor and allowing it to be heard at the bankruptcy hearings. In court papers earlier this month, US Airways said it supported the extension of AMR’s exclusivity period.
A lawyer for US Airways tried to address the court at Thursday’s hearing, but Judge Lane said he did not want to be distracted by merger talk.
“I know [US Airways is] a creditor, but there are a lot of creditors in the case,” Lane said. “I don’t want to get sidetracked on that particular issue this morning.”