US Airways quietly became creditor of American Airlines

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by JASON WHITELY

Bio | Email | Follow: @jasonwhitely

WFAA

Posted on July 12, 2012 at 4:15 PM

Updated Thursday, Jul 12 at 10:31 PM

DALLAS - US Airways has quietly been buying unsecured debt of AMR Corporation, the parent company of American Airlines, to give it a seat at the table at the bankrupt airline.

“We own a small amount of AMR’s publicly traded debt," said John McDonald, US Airways spokesman in an e-mail to News 8. "We purchased the debt to ensure that we would have standing to participate in proceedings before the Bankruptcy Court in AMR’s Chapter 11 case. We think this will be particularly important now that AMR has publicly committed itself to a review of strategic alternatives.”

US Airways filed a motion in U.S. Bankruptcy Court on Thursday declaring itself a creditor of AMR.

US Airways also asked the court to extend American’s exclusivity period to reorganize alone until December 28.

Two sources told News 8 that US Airways quietly purchased about $1 million worth of AMR debt recently. It's uncertain what, if any, influence that might have with the court or American's reorganization.

The Fort Worth-based carrier discounted the US Airways move as a stunt.

“US Airways’ filing in court is a meaningless ploy to garner publicity," said Bruce Hicks, American Airlines spokesman. "US Airways admits they own a very small amount of debt, which gives them no special position with the court or in this process. Our focus remains on creating the strongest company and greatest value for our stakeholders.”

It is a clever and risky move, said Mark Drusch, a former executive at Continental Airlines and Lufthansa.

"The move does show the court and labor unions that US Airways is serious in its efforts to acquire the bankrupt airline," he said.

US Airways has made no secret that it wants to merge with American Airlines. The labor unions representing American’s pilots, flight attendants and ground workers support the merge attempt. This week, American said it would look at merger options.

But American has worked hard to reach new labor contracts with its pilots and ground workers, represented by Transport Workers Union. Those proposals offer pay raises and save jobs that were originally planned to be eliminated.

American is still trying to negotiate a new contract with the Association of Professional Flight Attendants.

E-mail jwhitely@wfaa.com

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