The merger is to be effected pursuant to a plan of
reorganization (the "Plan") for the Debtors in their
currently pending cases under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York. The Plan is
subject to confirmation and consummation in accordance
with the requirements of the Bankruptcy Code.
connection with the merger agreement, AMR has entered
into a support agreement with certain unsecured
creditors holding approximately $1.2 billion of
prepetition unsecured claims against the Debtors.
Pursuant to the support agreement, the creditors
party thereto have agreed, subject to certain
conditions, to support a plan of reorganization
implementing the merger and incorporating a compromise
and settlement of certain intercreditor and intercompany
Provisions of the support agreement relating to
the treatment of prepetition unsecured claims against
the Debtors and the treatment of existing equity
interests in AMR are summarized further below.
The combined airline will offer more than 6,700 daily
flights to 336 destinations in 56 countries.
The combined airline is expected to maintain all
hubs currently served by American Airlines and US
Airways, resulting in more travel options for customers.
Both airlines expect that the regional carriers
they own AMR Corporation's American Eagle and US
Airways' Piedmont and PSA will continue to operate as
distinct entities, providing seamless service to the
The company will be headquartered in Dallas-Fort
Worth and will maintain a significant corporate and
operational presence in Phoenix.
"Today, we are proud to launch the new American Airlines
– a premier global carrier well equipped to compete and
win against the best in the world," said Tom Horton,
Chairman, President, and Chief Executive Officer of
"Together, we will be even better positioned to
deliver for all of our stakeholders, including our
customers, people, investors, partners, and the many
communities we serve.
"The combination of American and US Airways brings
together two highly complementary networks with access
to the best destinations around the globe and gives us a
strong platform to provide our customers the most
connected, comfortable travel experience available.
The operational and financial strength of the
combined airline is expected to enable continued
investment in new products and technologies and will
create exciting new opportunities for our people, even
as we deliver strong cash flow and sustainable
"Over the past year, the American team stood tall as we
established a rock solid foundation for long-term
success through an efficient and effective
As part of this process, after months of
exhaustive analysis and a thorough review of all
alternatives, we concluded that this merger is the best
outcome for our company, delivering not only the
greatest value for our financial stakeholders, but also
positioning us well for sustainable success over the
"This merger provides enhanced potential for full
recovery for our creditors.
In addition, I am pleased that we were able to
obtain the support of a sizable portion of our unsecured
creditors for a plan that provides a recovery of at
least a 3.5% aggregate ownership stake in the combined
airline for our shareholders.
It is unusual in Chapter 11 cases – and
unprecedented in recent airline restructurings – for
shareholders to receive meaningful recoveries.
I look forward to working closely with Doug
Parker, whom I have known as a friend for more than 25
years, and with the leadership teams of both companies
to assure a smooth integration and the creation of a new
Doug Parker, Chairman and Chief Executive Officer of US
Airways, said, "Today marks an exciting new chapter for
American Airlines and US Airways.
American Airlines is one of the world's most
The combined airline will have the scale, breadth and
capabilities to compete more effectively and profitably
in the global marketplace.
Our combined network will provide a significantly
more attractive offering to customers, ensuring that we
are always able to take them where they want to travel,
when they want to go."
Parker continued, "Today's announcement is possible only
because of the important work carried out over the past
year by Tom Horton and the American team.
No one cares more about the long-term success of
American Airlines and its people than Tom.
Through a successful restructuring and this
merger, Tom and the American team have established an
excellent foundation for the new American Airlines to
become a premier global airline.
I am grateful for all that Tom has done to ensure
that American is in the best position possible for
future success and am delighted he has agreed to remain
on board to assist with the transition.
am particularly pleased for the employees of both US
Airways and American.
This merger will create a stronger company, with
the path to improved compensation and benefits and
greater long-term opportunities for all our employees.
We are grateful to have the support of both
companies' unions and thank them and their leaders for
their hard work and vision.
We look forward to a bright future for our
employees and enhanced service and choice for our
today's announcement, we start becoming one team and one
The International Association of Machinists and
Aerospace Workers (IAM) said Contracts First, Merger
Second. “IAM members at US Airways need and deserve
contracts now,” said IAM District 141 President Rich
Delaney. “The Machinists Union will not allow US Airways
to stall our members’ contract negotiations while it
devotes its attention to merging with American Airlines.
The IAM is prepared to support this merger only if it
provides real value to employees… While US Airways and
American Airlines today declared their intention to
merge, the pairing still faces many obstacles, including
shareholder and regulatory approval.”
IAM has been in negotiations with US Airways to amend
existing contracts for approximately two years,” said
IAM District 142 President Tom Higginbotham.
“US Airways, however, has been more concerned
with courting American Airlines than negotiating with
its own employees."
U.S. Senate Committee on Commerce, Science, and
Transportation Chairman John Rockefeller concerned for
travelers in proposed American, US Airways merger. “We
will review the proposed merger of American Airlines and
US Airways very closely.
Industry consolidation has created stronger and
more financially viable airlines, which are necessary
for our country’s long-term economic growth.
But, it has also resulted in fewer choices for
consumers, higher air fares, and reduced air service to
small and medium sized communities.
Any further airline merger must be carefully
evaluated to make sure it is in the best interest of the
travelling public by creating more competition, more
options, and lower fares.”