In the News

American Airlines, US Airways Complete Merger

By Susan Carey and Jack Nicas, Wall Street Journal

American Airlines Group Inc. was born Monday morning after AMR Corp.'s American Airlines stepped out of bankruptcy and merged with US Airways Group Inc. The new company is now the world's largest airline by traffic.

The new American said Monday that holders of AMR common share, which ceased trading Friday, will receive an initial distribution of 0.0665 AAL share for each AMR share held.

They could receive more in the next 120 days depending on the trading price and the total allowed claims to AMR's creditors. The two-year restructuring of AMR resulted in outsize recovering for unsecured creditors, who will be repaid in full, AMR's big unions, which will receive a big slab of new equity, and AMR's common holders.

Normally in airline restructurings, creditors receive cents on the dollar of their claims and common holders are wiped out.

The initial distribution of new AAL shares will bring AMR common shareholders 3.5% of the equity of the combined company, the minimum envisioned in the original merger plan.

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AMR-US Airways Said to Settle U.S. Merger Antitrust Suit

By Sara Forden, David McLaughlin & Mary Schlangenstein
Bloomberg

American Airlines and US Airways Group Inc. have reached a settlement with federal regulators in the U.S. lawsuit seeking to block their $17.2 billion merger, a person familiar with the matter said.

A proposed agreement with the Justice Department is set to be announced today, the person said, asking not to be identified because the negotiations are private. The deal would require a judge’s approval.

The agreement puts the airlines back on track to combine, bringing American parent AMR Corp. out of bankruptcy and creating the world’s largest carrier. The U.S. sued to block the combination, saying it would harm consumers by reducing competition and raising ticket prices. The airlines maintain a merger is the only way they can compete with larger United Continental Holdings Inc. and Delta Air Lines Inc.

AMR rose as much as 42 percent to $13.50 in over-the counter trading. US Airways jumped as much as 9.5 percent to $25.49 in New York before trading was halted.

The carriers have agreed to surrender slots at Washington’s Reagan National airport to help address Justice Department concerns over the merger, people familiar with the negotiations said earlier.

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Judge lets US Airways pilot union file its own brief (but don’t be redundant)

U.S. District Judge Colleen Kollar-Kotelly told the US Airline Pilots Association on Tuesday that it can file its own brief in support of the US Airways-American Airlines merger.

But she put a lot of provisos on that approval. In particularly, she told the union, which represents US Airways pilots, to combine its brief with that of other American Airlines and US Airways unions if everybody is making the same points.

Here’s the meat of her order allowing the union to file an amicus curaie (friend of the court) brief (We’ve divided one long paragraph into several to make it more readable):

First, the brief must be filed by no later than November 15, 2013.

Second, the brief must not exceed eight (8) pages in length.

Third, the Court requests that amicus not include factual materials that will not be presented by the parties as part of the trial record. Instead, amicus should, where possible, focus its brief on legal arguments in support of its position.

To the extent amicus incorporate factual information not introduced and subject to cross-examination by the parties, this information will be disregarded by the Court.

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US Airways Pilot Union Adds Its Name to the ‘Friends’ List in American Airlines-US Airways Case

We haven’t heard from the US Airline Pilots Association in recent weeks as other US Airways and American Airlines unions asked permission to file amici curiae (friends of the court) briefs in support of the carriers.

Well, Thursday, we have.

USAPA, which represents US Airways pilots, asked U.S. District Judge Colleen Kollar-Kotelly for permission to file an amicus brief in the Department of Justice lawsuit to block the carriers’ proposed merger.

Said USAPA in its motion:

USAPA plans to focus its brief on addressing, from the particular perspective of US Airways pilots, the benefits an approved merger between US Airways and American Airlines would provide to competition and to consumers. USAPA anticipates that its proposed brief would thus address, inter alia, (1) the benefits to the public of a viable airline with a substantial network of routes that can compete with the industry leaders on price, service, and quality, (2) the benefits to the public of airlines retaining experienced pilots, and (3) the benefits to the public of labor peace.

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Airlines and Feds Agree to Mediator in Merger Case

American Airlines, US Airways and the U.S. Justice Department say that they have agreed on a mediator to try to settle the government's lawsuit against the airlines' proposed merger.

But if they can't settle, the sides are preparing for a trial scheduled to start Nov. 25.

The CEOs of American parent AMR Corp. and US Airways Group Inc. have said they were open to a settlement that would allow the merger to go ahead, but have declined to discuss details of negotiations.

The airlines and the Justice Department said in a court filing Monday that they have agreed to a mediator suggested by a U.S. district court judge in Washington. They gave no other details.

They also said that they have finished much of the exchange of information that comes before a trial. The federal government and six states have taken depositions from 19 employees of the two airlines. Both sides have also interviewed under oath nine other people, mostly executives of other airlines, they said.

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AMR, US Airways Extend Merger Deadline

AMR and US Airways have agreed to extend the termination date of their pending merger by approximately a month. Basically, the companies changed the deadline from December 17 to January 18, at which time either airline can terminate their agreement to merge. This should allow ample time for the Judge to issue a decision in the lawsuit filed by the DOJ to block the merger.

From the AMR-US AIRWAYS Amendment, the date on which either AMR or US Airways may terminate the Merger Agreement to the earlier of:

A.            the later of (i) January 18, 2014 and (ii) the 15th day after the United States District Court for the District of Columbia (the “District Court”) enters an order in favor of AMR and US Airways, provided that such order is entered on or prior to January 17, 2014, and

B.            five days after the District Court enters a final, but appealable, order permanently restraining, enjoining or otherwise prohibiting consummation of the merger following the Trial.

The companies’ press release, distributed this morning, may be found here.

Click here for the companies' Amendment to their merger agreement.

USAPA Communications

US Airways, AMR Seek an Extension for Merger - Report

(Reuters) - US Airways Group Inc LLC and American Airlines parent AMR Corp said they would ask their boards to extend the termination date of their proposed $11 billion merger due to uncertainties related to a government lawsuit, the Wall Street Journal reported, citing sources.

The Justice Department filed a lawsuit on Aug. 13 to stop the deal arguing the merger would violate antitrust laws because it would lead to higher airfares and related fees.

AMR Chief Executive Tom Horton and US Airways CEO Doug Parker, in response to questions from members of the creditors committee in AMR's bankruptcy case, said that they intended to extend the termination date in case the merger did not receive regulatory approval by Dec. 17. ()

The new termination date was not known.

The companies have said that the deal is critical for American Airlines, whose parent, AMR Corp, has been operating under Chapter 11 bankruptcy protection since late 2011.

US Airways, in a filing Tuesday evening, argued that the deal was lawful and should be allowed to go forward.

The US Airways-American merger helps 70,000 workers

By Gary Hummel and Roger Holmin
Cbarlotte Observer

Labor Day is a time of reflection for the nation’s union members. We celebrate the labor movement’s achievements for all workers and renew our fight for workplace protections and wages and benefits to support our families. As representatives of more than 70,000 American Airlines and US Airways employees, we look to the pending merger of our two airlines as an outstanding example of how much workers, acting together, can accomplish in today’s economic environment.

All of our members have been hurt by a turbulent aviation industry in recent years. Labor and airline shareholders bore the brunt of the economic losses of the past decade. American Airlines entered bankruptcy in late 2011, and the stakes were incredibly high. American unions are some of the largest creditors in the bankruptcy, and we also had to think about the best long-term option for job security for more than 50,000 American Airlines union members.

To that end we hired top-tier financial and legal advisors, reviewed American’s financial and operational prospects from every possible angle and determined that a merger with US Airways was the path that had to be taken. It was the only option that would allow American to compete effectively against carriers that had substantially larger networks – networks that were the product of the government-approved mergers of Delta and Northwest, United and Continental, and Southwest and Air Tran. We understood that if American left bankruptcy as a stand-alone carrier, inevitably it along with tens of thousands of jobs would not survive.

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US Airways and American Ramp Up Merger Push as Labor Steps Up

(TheStreet) -- Signs of a full-court merger press emerged Thursday afternoon, as US Airways and American pushed for an early court date, backed by most of the airlines' unions, and two labor leaders visited Pennsylvania's attorney general to challenge her opposition.

The airlines filed a motion requesting a court date of Nov. 12, in U.S. District Court for the District of Columbia, where the Justice Department has filed a suit contesting the planned merger. The DOJ has requested a court date of Feb. 10, 2014.

"We are eager to get to court so that we can make our case and explain exactly how this merger enhances competition across the US and the globe, and begin creating the new American Airlines as soon as possible," said US Airways CEO Doug Parker, in a message to employees.

Late Thursday, a coalition of six unions representing 70,000 workers at the two carriers issued a joint statement backing the request for a speedy trial. "Our members want a fair shot at competing in the market place," the unions said. "Our members have borne the brunt of the severe turbulence in the aviation industry. Justice delayed is justice denied for our members."

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