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Boeing backs AMR's reorganization plan

by Lou Whiteman | Published April 25, 2012 at 3:46 PM

AMR Corp. on Wednesday, April 25, won a key endorsement for its effort to emerge from bankruptcy as an independent, days after the airline's employees signaled they could support a court-assisted merger with US Airways Group Inc.

James McNerney, CEO of Boeing Co., during a conference call with investors said that Fort Worth-based AMR "is working through the process now, and we support them emerging from this thing as a stronger airline." McNerney did leave room to support a potential consensual deal, should one emerge, saying that if "a merger makes sense to the two managements," Boeing would support that as well.

Officials at AMR, parent of American Airlines Inc., have voiced their preference to escape Chapter 11 before considering consolidation, but predators are circling. Tempe, Ariz.-based US Airways has held conversations with a range of AMR creditors, and last week unions representing more than 50,000 American Air employees said they had reached agreements on term sheets that would govern American employees in the event of a merger.

Boeing's opinion is significant because the company holds one of nine seats on AMR's unsecured creditors' committee, a group that will be pivotal in determining how the airline exits bankruptcy.

The comments came as US Airways talked up the benefits of a deal on its own conference call, with CEO Doug Parker saying "we are eager to demonstrate to the creditors of AMR that our plan would result in higher returns than the American standalone strategy would." US Airways has not made a formal bid for AMR, and Parker said that he would prefer to work with American management on a consensual deal.

US Air officials said they believe they could extract at least $1.2 billion in cost cuts and revenue enhancements via a merger, enough to offset higher pay rates for employees of both companies.

Another AMR ally, International Consolidated Airlines Group SA, said Wednesday it had retained Centerview Partners LLC to advise it on the bankruptcy but intends to stay on the sidelines for the time being. IAG, parent of American Airlines partners British Airways plc and Iberia Líneas Aéreas de España SA, according to CEO Willie Walsh intends "to be passive but ready to act" as needed.

Some in the industry have suggested IAG as a white knight financial partner for AMR, though the company as a foreign entity would be limited by U.S. law to acquiring a minority stake in the airline.

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Boeing backs AMR's reorganization plan

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