AMR creditors want all stock merger with US airways- LCC, DAL

The creditors of AMR Corp which is the parent company of American Airlines Inc. and American Eagle Airlines Inc. wants to take over US Airways (NYSE:LCC) which is a small rival organization in the same industry in order to come out of the bankruptcy. At the same time the airline thinks this merger which can either be a combination or even if it emerges with a new name the company will be rocking in its business.
Usually in case of bankruptcy creditors expect the claims to be paid in cash rather than in stock. whereas AMR creditors chose to be an all stock deal which shows that they are accepting for the merger proposal and expect that this merger can earn them potential profits and provide the world number one service.
On the other hand US Airways before formal declaration of the all stock merger waiting for the AMR creditors’ committee’s decision to inform the payment mode.
The talks of mergers between US Airways, AMR Creditors and AMR will be very soon made public during the month of January as for the time been the parties would like to be under cover and at the same time there was no response from the creditors for their payment mode.
The AMR Corp was thinking about the ways to come of out the bankruptcy and at the same moment The US Airways made the merger proposal which is as giving light to the drowning darkness.
According to the information the AMR Pilots along with US Airways Pilot will be joining the merger discussions in calculating the benefits and loses that result in case of the merger. And it will be an added advantage if Allied pilot also will be a part of the merger discussions.
Many people’s including The APA (Unsecured creditors committed) expectations have come down towards AMR’s internal handling principles due to the bankruptcy and everybody seems to be in favor of the merger.
Sticky Issue:
The main issue which is running through the discussions is how to integrate the labor unions and what will be the share of each airline after both the companies are merged together. And after this labor union integration what will be the percentage sharing in the profits. So it seems a lot of questions arising regarding post merger.
According to the US Airline proposal sent during the month of November, 70% was the share of AMR and rest 30% was shared by US airlines. There are many proposals as the merger should be 80 -20 based or 70-30 based. But let’s just wait and watch till Jan for the decision of creditors committee.
Shares of US Airways Group, Inc. (NYSE:LCC) were up by 2.13% to close at $12.97, Shares of Delta Air Lines, Inc. (NYSE:DAL) were up by 5.32% to close at $11.29.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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