US Airways Group Inc. (LCC) is in talks with some creditors and advisers of bankrupt American Airlines regarding a takeover of the carrier, Bloomberg reported.
AMR Corp. and some of its subsidiaries, including American Airlines and American Eagle, filed for Chapter 11 bankruptcy protection in November 2011.
The carrier had cited its cost disadvantage compared to larger competitors and said that the bankruptcy filing was to achieve a cost and debt structure that is industry competitive.
According to the report, some members of the unsecured creditors committee are said to have given a positive response to US Airways' plan for the combined airline. The objective is to complete the combination before AMR exits Chapter 11 protection.
After the 9/11 attacks and subsequent downturn, AMR was one of the few airlines that averted bankruptcy. However, the company reported losses in the following years even as peers resolved cost issues and returned to profit.
While labor unions had made concessions to AMR in 2003, they were now seeking improved pay scales. The carrier is now trying to rework contracts with them.
Bloomberg quoted Tom Hoban, a spokesman for the Allied Pilots Association or APA, as stating that if the union were not to reach a labor agreement with AMR, it might be willing to work with a new management that comes after the merger. The APA is a member on the creditors' panel.
Delta Airlines and private-equity group TPG also are weighing potential bids for AMR.
LCC closed on Thursday at $7.33, down $0.30 or 3.93 percent from the previous close, on a volume of 6.69 million shares.
by RTT Staff Writer
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