AMR says creditors approve reorganization plan
Thursday, August 1, 2013
FORT WORTH, Texas (AP) — Creditors overwhelmingly approved the bankruptcy reorganization plan for American Airlines parent AMR Corp., which includes a merger with US Airways that would create the world’s biggest airline.
AMR said Thursday that preliminary results show that at least 88 percent of the ballots cast by creditors favored the turnaround plan. AMR shareholders backed the plan even more strongly, with more than 99 percent of shares cast in favor, the company said.
The plan still needs approval from a federal bankruptcy judge in New York, who has scheduled a confirmation hearing for Aug. 15. Antitrust regulators in the U.S. Department of Justice are also reviewing the merger with US Airways.
Since filing for Chapter 11 protection in November 2011, AMR has cut labor costs by about one-fifth and steamed ahead with orders for hundreds of new planes to update American’s fleet. AMR expects to close the merger with US Airways and exit bankruptcy by the end of September.
Voting by creditors ended Monday. The final results must be filed with the bankruptcy court before Aug. 15.
“This is another important milestone toward our launch of the new American,” AMR CEO Tom Horton said in a statement. “The overwhelming support for our plan of reorganization is a testament to the resilience and hard work of the entire American team.”
AMR lost more than $10 billion after 2000 as the airline industry was buffeted by the 9/11 terror attacks, recessions that curbed travel demand, and spikes in jet fuel prices. AMR tried to return to profitability by extracting cost-cutting contracts from labor unions in 2003, but that failed. Rivals United, Delta and US Airways went through bankruptcy and emerged with lower costs than American, and United and Delta used acquisitions to surpass American in size.
This week also marked the deadline for objections to AMR’s plan. The city of Fort Worth — American’s current and future hometown — former TWA pilots, and plaintiffs in a lawsuit against the merger all weighed in.
Some filed limited objections. They included the union for US Airways pilots, which said it still supported the merger but said American didn’t prove that the makeover will ensure that it doesn’t wind up back in bankruptcy.
A group of pilots who flew for TWA when AMR bought that airline in 2001 asked for more time while they challenge a labor contract that they said stripped them of job protections.
Fort Worth officials raised an objection over the future of a lease on a former American maintenance facility.
AMR declined to comment on the objections. It has until Aug. 8 to respond in court.
Shares of US Airways Group Inc. rose 3 cents to close at $19.38, near their 52-week high of $19.70. They have increased more than four-fold in value since AMR’s bankruptcy filing, as investors bet on the prospect of a merger. AMR shares no longer trade on the New York Stock Exchange, but in over-the-counter trading they rose 11 cents to $6.04. They were worth $1.62 the day before the Chapter 11 filing.
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