The Big Question in US Airways/AMR Merger: Who Runs It?
CHARLOTTE, N.C. ( TheStreet) -- Nine months after AMR (AAMRQ.PK) filed for bankruptcy protection amid speculation it would merge with US Airways (LCC), the primary question appears to be this: Who would run the combined companies?
The possibility of a merger appeared to increase Friday, when AMR and US Airways signed a non-disclosure agreement enabling them to discuss confidential information and prohibiting disclosure to outside parties. US Airways had hesitated to sign such a deal given that it has established relationships with AMR's unions, but apparently decided it needed to play by the rules established by American and its creditors.
American has resisted a merger, but seems to have been dragged, kicking and screaming, into discussions because that is the preference of its creditors committee, which includes its three principal unions. So while the carrier has gradually inched closer to accepting what many consider to be inevitable, it continues to say that it prefers to reorganize first.
Aviation consultant Bob Mann said two of the three most critical issues in a merger have already been decided."The usual three major ego issues are the name of the company, where the headquarters will be and who will run it," Mann said. "Two are already done" because early on in his pursuit of American, US Airways CEO Doug Parker said he would retain the name and the Dallas headquarters. Said Mann, "We're down to 'Who's going to run it?" American filed for bankruptcy protection on Nov. 29, 2011. By then, the filing was expected, just not quite so soon. Talks between the carrier and its pilots unions had broken down "and it became increasingly obvious by September/October that things were not going to work out," said Laura Glading, president of the Association of Professional Flight Attendants, which represents American flight attendants, in an interview. But the thinking in November was that American would use the threat of bankruptcy to negotiate a better deal. Now, "American needs to merge," Glading said. "We think American is going to be in jeopardy if it manages to emerge (from bankruptcy) as a standalone." Asked why AMR CEO Tom Horton is resisting, she said: "I think he knows they have to merge, but he wants to do it on his own terms. In his heart of hearts, he thinks he is the best man for the job of running it."
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