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A US Airways plane takes off behind an American Airlines jet at Ronald Reagan National Airport in Washington. (KEVIN LAMARQUE/REUTERS)
A US Airways plane takes off behind an American Airlines jet at Ronald Reagan National Airport in Washington. (KEVIN LAMARQUE/REUTERS)

AMR weighing merger, other options: CEO Add to ...

AMR Corp. is going ahead with plans to evaluate a range of strategic options including potential mergers and will reach out to interested parties, chief executive officer Tom Horton said in a letter to employees on Tuesday.

“We are approaching the point where we have greater clarity on our revenue outlook and cost structure and can begin to accelerate the plan for the new American,” Mr. Horton said.

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“It now makes sense to carefully evaluate a range of strategic options, including potential mergers, which could make the new American even stronger,” he said.

The letter comes two months after the parent of American Airlines said it will explore merger options while still in bankruptcy restructuring, bowing to pressure from creditors including its largest labor unions.

Prior to the agreement in May with its unsecured creditors committee, American had said it intended to reorganize as a stand-alone carrier, shrugging off merger interest expressed by rival US Airways Group Inc.

The carrier, however, has faced mounting pressure from vocal members of its creditors committee who believe a better future for AMR can be secured by merging with US Airways.

The third-largest U.S. airline filed for bankruptcy in November, citing an untenable labour cost structure.

As part of the evaluation led by management and the board in collaboration with its creditors committee, Mr. Horton said American is examining the strategic fit of possible combinations – including an analysis of synergies, costs, and tax and capital structure implications.

He added that American met with its creditors committee earlier on Tuesday and discussed its preliminary view of the strategic options available to American.

In a statement, US Airways said: “We are pleased that AMR’s process to explore merger options is moving forward. All we have asked for is a fair and balanced opportunity to present our plan versus others, and we are hopeful this is the beginning of such a process. We remain confident that our plan will maximize value for all stakeholders.”

Mr. Horton said he has been a proponent of airline industry consolidation for many years and the company has assessed “many possible combinations” in the past, including an acquisition of US Airways. He added that he had also approached his counterparts at other airlines last year to discuss the merits of possible combinations.

But since American entered into Chapter 11 bankruptcy in November, his view has been that American should first put its own house in order before considering a “complex and challenging airline acquisition,” Mr. Horton said.

“That is just common sense. But it is also a prudent merger strategy, should we take that path, to assure that we begin from a position of greatest strength and stability,” he said.

“It is no surprise that others have sought to disrupt our restructuring for their own benefit and contrary to the best interests of our company,” he added. “This has not, however, distracted us ... and we are arriving at the appropriate point to carefully and objectively evaluate the range of strategic alternatives available.”

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