* Group to only fund bankruptcy exit plan if board replaced
* AMR wants to exit bankruptcy as independent firm
* US Airways making aggressive takeover push
* US Airways has support from AMR unions
By Nick Brown
NEW YORK, Nov 28 A group of some of bankrupt
American Airlines' most significant bondholders said
it will not support a standalone restructuring unless a new
board is brought in, suggesting there is even less support for
current management than first thought.
The 12-member bondholder group, which includes JPMorgan
Chase & Co, Pentwater Capital Management and York
Capital Management, is the primary well-organised group to have
expressed an interest in funding an independent exit for the
airline's parent company AMR Corp.
AMR filed for bankruptcy in November 2011, seeking to reduce
labor costs. Its current management team, led by Chief Executive
Tom Horton, has lost the confidence of the company's unions,
which support a takeover bid by smaller competitor US Airways
The bondholder group, which holds more than $700 million in
AMR debt, said in a letter to Keith Wilson, president of
American's pilots' union, that its support for an independent
exit is "conditioned, among other things, on that plan providing
for the naming of a new board of directors."
The letter, sent on Nov. 15, was not public, but the Allied
Pilots' Association made it available to its 8,000 members on
Wednesday and a copy was obtained by Reuters.
"The board will ... be responsible for selecting a
management team," the bondholders said in the letter. "We expect
the board to share our view that an important criteria for
selecting the leader of that team will be a demonstrated ability
to maximize shareholder value."
A spokesman for AMR declined to comment on Wednesday.
The circulation of the letter may also signal an attempt by
the union to nudge its members toward ratifying a new labor
contract proposed by AMR.
Resolving the bitter, years-long labor dispute between AMR
and its pilots is a top priority for the company and its
creditors, as AMR tries to convince investors of its long-term
The contract would give the pilots a 13.5 percent equity
stake in the company. The bondholders said in their letter that
they would work cooperatively with AMR's shareholders in
selecting a new board.
"This commitment by the (bondholders)... shows that APA's
13.5 percent equity claim is of critical importance in shaping
what the new American Airlines will look like and who will lead
it," the union said in a statement circulated to its members
along with the letter.
A vote on the proposed contract is set for Dec. 7.
The case is In re AMR Corp et al, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.