US Airways explores AMR merger option to boost its revenue
MANILA, Philippines — US Airways Group Inc. is studying a potential merger with bankrupt AMR Corp. that would fix a weak domestic route system at American Airlines and boost revenue, two people familiar with the matter said.
President Scott Kirby is leading US Airways’ analysis of how to combine the airlines, said the people, who asked not to be identified because the matter is private. Any bid may still be close to a year away, because AMR now holds the exclusive right to file a reorganization plan, the people said.
American has pared its flight network to the point that some corporate travelers have gone elsewhere, leaving the money- losing carrier unable to support most of its hub airports, one person said. That deficiency could be solved by blending American, the third-largest US airline, with No. 5 US Airways, the people said.
“Unsecured creditors would get a better return out of a merged airline than American trying to go it alone,” said Jeff Straebler, an independent airline analyst based in Stamford, Connecticut.
The combination would hold about a 20 percent domestic market share, basically putting it on equal footing with United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co., Straebler said in an interview. Those carriers rank first, second and fourth in the US by traffic.
A merger attempt is likely, though Tempe, Arizona-based US Airways is still weighing options, the people said. The shape of any plan would evolve as Fort Worth, Texas-based AMR settles issues such as pensions and labor contracts in court, one person said.
Traffic to American’s hubs would grow by funneling in travelers from US Airways, the person said. In turn, a stronger domestic system would feed into American’s routes across the Atlantic and to Latin America, said the person, who declined to give financial details because the numbers are preliminary.
A US Airways spokeswoman, Michelle Mohr, declined to comment, as did Sean Collins, an American spokesman.
TPG Capital and Delta also are evaluating possible bids for American, people familiar with the matter have said. TPG and Delta have said they aren’t commenting about any interest in AMR, which filed for Chapter 11 protection in US Bankruptcy Court in Manhattan on Nov. 29 after posting annual losses starting in 2008.
US Airways hasn’t discussed its interest with AMR’s executives, one person said. Nor has it spoken with TPG about American, the person said.
TPG founder David Bonderman led a group that invested more than $200 million in America West Airlines Inc. as it exited bankruptcy in 1994, taking a 33.5 percent stake and controlling a majority of its board. That carrier later became America West Holdings Corp., a US Airways predecessor.




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