US Airways seeks to sell shareholders on AMR deal

Thu Jun 14, 2012 6:16pm EDT

US Airways passengers check in for their flights at Charlotte Douglas International Airport in Charlotte, North Carolina April 20, 2012. REUTERS/Chris Keane

US Airways passengers check in for their flights at Charlotte Douglas International Airport in Charlotte, North Carolina April 20, 2012.

Credit: Reuters/Chris Keane

(Reuters) - The top executive of US Airways Group Inc LCC.N sought to bolster shareholder support on Thursday for a proposed merger with bankrupt American Airlines, saying the financial community already likes the idea and the two airlines would make a strong combination.

Speaking at the No. 5 U.S. airline's annual shareholder meeting in New York, Chairman and CEO Doug Parker said a tie-up with American would create "an airline that can compete with anyone, that can be the best airline in the world." The meeting was broadcast over the Internet.

US Airways disclosed its interest in merging with American in January. American's parent, AMR Corp (AAMRQ.PK), filed for bankruptcy protection in November of last year.

Earlier this week, sources told Reuters that US Airways is hoping to file financial documents with U.S. antitrust regulators as early as July for the proposed merger with AMR Corp.

Parker said a merger would make the combined carrier much stronger in areas where both carriers individually are currently weak. He added that US Airways' stock price, which has more than doubled this year, has been aided by financial community support for the proposed merger.

Shares of US Airways rose 4.3 percent to $12.48 on Thursday on the New York Stock Exchange.

Parker said American had lost market share in certain areas of the United States "because they've sat out consolidation." He said mergers have helped airlines become more profitable in recent years.

Although American parent AMR has said it prefers to exit Chapter 11 as a standalone carrier, it did reach an agreement with its unsecured creditors committee last month to explore various merger scenarios in bankruptcy.

Parker said US Airways understands that process is due to start after a ruling, expected by June 22, in a court proceeding currently under way in which American is seeking permission to throw out collective bargaining agreements.

Since expressing its interest in acquiring American, US Airways' plan has won the backing of three unions that represent American's ramp workers, pilots and flight attendants.

In a statement, American said recent revenue gains showed that its reorganization strategy was improving results.

Passenger revenue per available seat mile, an important measure, rose 7.3 percent at American in May, compared with a 6 percent rise reported by Delta Air Lines (DAL.N) for that month and an estimated rise of up to 1 percent at United Continental Holdings (UAL.N).

"Our revenue performance is strongly outpacing the industry this year, including just this past month, and our operational and customer service performance are the best they've been in many years," American's statement said.

(Reporting by Karen Jacobs in Atlanta; editing by Matthew Lewis, Bernard Orr)

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Comments (1)
commentator2 wrote:
Pretty audacious on the part of Mr. Parker. Of course some on Wall Street like this idea because there is money to be made on the short term hype. If history proves anything, however, Mr. Parker may be full of big ideas of a super carrier but does have a poor execution track record. Ask any current US Airways flight attendant or pilot and they may tell a different tale of substandard wages, tension and distrust, and lack of leadership and direction. Merging with AA will not solve this cultural contention, but rather elevate the strife.

Jun 14, 2012 2:32pm EDT  --  Report as abuse
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