AMR Counters US Airways Bid With New Seat Plan, Better Stats

DALLAS (TheStreet) -- Bankrupt AMR (AAMRQ.PK) stepped up its resistance to the takeover bid by US Airways, (LCC), unveiling new passenger amenities including lie-flat business class seats and also releasing strong April unit revenue results.

"We have a lot of challenges ahead of us," said Virasb Vahidi, AMR chief commercial officer, in an interview following a media event, held aboard a Boeing 777-200 and focused on improved technology and fleet modernization efforts. "Our transformative initiatives are a clear signal to our customers and to our people that we believe in our future."

American's fleet modernization plan includes lie-flat seats in its fleet of 47 Boeing 777-200s and in the approximately 30 767-300s it intends to keep, as well as increased legroom in a new coach product called Main Cabin Extra, which will be available to premium passengers as well as to passengers who pay extra.

"Our plan is to bring this airline back to the leadership position where it belongs," Vahidi said. Earlier, he defined American as "this nation's flag carrier." As for continuing efforts by US Airways to gain backing from labor and from Wall Street analysts for its takeover bid, Vahidi called it "a lot of noise in the background (with) no impact on the process, which needs to be followed step by step."

In the current case, AMR has exclusivity until Sept. 28 to submit a plan of reorganization. By definition, the bankruptcy process looks favorably upon a debtor-in-possession's reorganization plan, although creditors have some influence. How much is uncertain.

Vahidi noted that AMR has recently been discussing its plan with Wall Street analysts. He anticipates support, he said, "once the analysts start to understand the details."

In April, American reported that its passenger revenue per available seat mile grew at 11.6% over the same month a year earlier, apparently the highest growth in the industry, a result of high load factors and a strong pricing. Vahidi said a key factor is that, after long delays, the impact of American's joint ventures across the Atlantic and Pacific is starting to kick in: Delta (DAL)has said several times, on earnings conference calls, that it can easily take years to realize the full benefit of such deals.

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