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TheStreet Open House

AMR Plays Its Best Card -- Latin American Strength

DALLAS ( TheStreet) -- Perhaps a merger with US Airways (LCC) is on the fast track, but American (AAMRQ.PK) is still pushing ahead on a restructuring plan that bolsters its international flying, particularly in Latin America, where it remains the dominant airline.

American said Monday it has signed new code-share agreements with two South American carriers, Bogota-based LAN Colombia and Sao Paulo-based TAM, both operated by Santiago-based LATAM Airlines Group, to strengthen its presence in Brazil and Colombia.

Additionally, late in 2013, American plans to begin to serve Bogota from Dallas and two Brazilian cities, Curitiba and Porto Alegre, from Miami. Dallas/Bogota will compliment Miami/Bogota, while the two new destinations will mean that American will serve nine Brazilian cities from Miami.

"This is part of our strategy to strengthen our network and our partnerships," said Virasb Vahidi, American chief commercial officer, in an interview. "We have said all along we want to create a premier network that caters to our best customers and grows in places where the economy is growing."

While momentum toward a merger appears to be strong, American continues to lay out the benefits of remaining independent, at least until its bankruptcy ends. In a letter to pilots on Monday, American vice president of flight, John Hale, wrote that CEO Tom Horton, appearing before pilots last week, "outlined the strong progress and improved performance we have achieved in restructuring and outlined all of the reasons -- from network and partners to fleet and products and services -- American is poised to be a successful, profitable and growing company that provides more opportunity for its people."

Hale noted that the standalone plan has, "at the heart," orders for 550 new aircraft. "These aircraft will help fuel growth and the addition of a substantial number of new mainline routes, with international outpacing domestic growth by a significant margin," he said. Given all the opportunities for career advancement, "a pilot's income in 2017 is expected to be about 50% higher than his or her 2012 earnings," Hale noted.

In the case of LAN Colombia, holding company LAN has been a member of the Oneworld Alliance for 12 years. Affiliates LAN Argentina, LAN Ecuador, LAN Peru and LAN Express, a Chilean domestic carrier, have had relationships with American. LAN acquired the Colombian carrier Aires in 2010. "We have been in a dialogue to expand the partnership," Vahidi said. LAN and TAM completed a merger this year, so the dialogue expanded to also include TAM in an American code share.

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