Parent of American Airlines approve reorg plan
Aug. 1, 2013, Fort Worth, Tx. - Creditors overwhelmingly approved the bankruptcy reorganization plan for American Airlines parent AMR Corp., which includes a merger with US Airways that would create the world's biggest airline.
August 1, 2013 By Carey Fredericks
AMR said Thursday that preliminary results show that at least 88 per cent of the ballots cast by creditors favoured the turnaround plan. AMR shareholders backed the plan even more strongly, with more than 99 per cent of shares cast in favour, the company said.
The plan still needs approval from a federal bankruptcy judge in New York, who has scheduled a confirmation hearing for Aug. 15. Antitrust regulators in the U.S. Department of Justice are also reviewing the merger with US Airways.
Since filing for Chapter 11 protection in November 2011, AMR has cut labour costs by about one-fifth and ordered hundreds of new planes to update American's fleet. AMR expects to close the merger with US Airways and exit bankruptcy by the end of September.
Voting by creditors ended Monday. The final results must be filed with the bankruptcy court before Aug. 15.
"This is another important milestone toward our launch of the new American,'' AMR CEO Tom Horton said in a statement. "The overwhelming support for our plan of reorganization is a testament to the resilience and hard work of the entire American team.''
AMR lost more than $10 billion after 2000 as the airline industry was buffeted by the 9-11 terror attacks, recessions that curbed travel demand, and spikes in jet fuel prices. AMR tried to return to profitability by extracting cost-cutting contracts from labour unions in 2003, but that failed. Rivals United, Delta and US Airways went through bankruptcy and emerged with lower costs than American, and United and Delta used acquisitions to surpass American in size.
In morning trading, US Airways Group Inc. shares fell 2 cents to $19.33, still close to their 52-week high of $19.70. They have increased more than four-fold in value since AMR's bankruptcy filing, as investors bet on the prospect of a merger. AMR shares no longer trade on the New York Stock Exchange, but in over-the-counter trading they rose 15 cents, or 2.5 per cent, to $6.08. They were worth $1.62 the day before the Chapter 11 filing.