This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AMR CEO Makes Case for Independence

DALLAS ( TheStreet) -- The board of AMR (AAMRQ.PK) is not going to turn the airline over to US Airways (LCC) without a fight.

On Monday, as AMR's attorneys tried to convince a bankruptcy court judge to abrogate its existing labor contracts, CEO Tom Horton reasserted his plans for American to remain independent, despite the surprise announcement on Thursday that US Airways had reached a tentative contract agreement with American's three principal labor unions.

"It's easy to understand US Airways' sense of urgency to find a way to address the challenges it has faced for a long time," Horton wrote in a letter to employees. "But I want you to understand these developments in no way alter our course."

He noted that under bankruptcy law, AMR has the exclusive right to pursue its plan of reorganization through the end of September, and possibly longer if an extension is granted. "It would be natural to look for an easy way out," he wrote. "But there is no easy path back to renewal and growth and industry leadership."

AMR's plan includes lower labor costs, an increased ability to fly regional jets and code-share with partners once the pilot's contract is altered under bankruptcy law; the ability to serve more markets when new aircraft arrivals begin; and lower costs associated with operating newer, more efficient aircraft.

There are also expectations for the maturation of a trans-Pacific joint venture with partners as well as a trans-Atlantic joint venture with partners, which is something that regulators approved for American's competitors long before they approved the same thing for American.

On Friday, American reported first-quarter results that showed its first-quarter passenger revenue per available seat mile rose 10.3%, ahead of both US Airways at 8.4% and United Continental (UAL - Get Report) at 5.2%. The same metric at Delta (DAL - Get Report) rose 13.5%.

Such results, if the trend continues, would no doubt become part of American's case, which is likely to include this question: If a carrier in bankruptcy can show that it can reduce costs and implement a plan that would enable it to produce profits in the future, doesn't such a company typically get a chance to reorganize?
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
DAL $46.34 1.30%
UAL $58.93 1.00%
AAPL $114.63 -3.20%
FB $94.06 -0.08%

Markets

Chart of I:DJI
DOW 17,550.69 -47.51 -0.27%
S&P 500 2,091.49 -6.55 -0.31%
NASDAQ 5,100.9480 -14.4340 -0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs