News Column

American Airlines Offers Reorganization Plan

April 16, 2013
AMR American Airlines

American Airlines parent AMR Corp. plans to pay $7.58 billion in stock payments to creditors as it emerges from Chapter 11 as early as this summer.

AMR filed its plan for reorganization in federal bankruptcy court. The plan, in more than 1,000 pages, outlines how the company will pay back creditors in whole and return to profitability as it merges with US Airways to create the world's largest air carrier.

The reorganization plan will pay shareholder 100 percent of their claimed debts and also give equity cuts in the new merged company to American unions and shareholder, according to plan.

The merger calls for a creation of an entirely new company based in Dallas and called American Airlines Group, made up of the old AMR Corp. and US Airways Inc.

The plan follows previous statements by American and US Airways executives. It gives 72 percent of the company to American Airlines debt holders, shareholders and employee groups. The other 28 percent goes to shareholders at US Airways.

AMR also cites about $10.6 billion in other claims on aircraft for payments and other leases yet to be made.

AMR is hoping for a May 30 hearing in from of Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York.

At that hearing AMR will formally present their plan.

AMR and AA will then have 60 days to win the approval of creditors, many of whom were convinced to support the merger deal before it was announced on Feb. 14.

The filing indicates that major groups, such as the Unsecured Committee of Creditors, is on board with the reorganization plan.

The reorganization plan does include the nearly $20 million payout to AMR CEO Tom Horton. That payout was rejected by Lane in a March 27 where he said the payout didn't comply with federal bankruptcy laws.

But Lane did say that the new company, American Airlines Group Inc., could give Horton the payout without approval of the court.

Under the proposed hearing timeline, creditors will have until July 29 to vote on the plan.

AMR is then asking for a final hearing on Aug. 15, where Judge Lane could approve the merger and the company could official emerge from bankruptcy.

American Airlines has about 6,500 employees in Tulsa, most at the Tulsa Maintenance and Engineering Center.

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(c)2013 Tulsa World (Tulsa, Okla.)

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