In American Airlines Merger, One CEO Had to Go
The creditors chose proactive, and Butler's team was hired.
It probably helped that Butler had represented US Airways in its 2002 bankruptcy and Skadden's head of restructuring, Jay M. Goffman, had worked closely with Parker after 9/11, when Parker ran America West. Skadden was also America West's counsel when it later merged with US Airways.
"We said: You should pick a firm that does a lot of deals," Goffman recalled.
The full press started in February 2012, when the committee's lawyers invited Horton and two of his top lieutenants to a dinner at the firm's Times Square office. There, 38 floors above the city, overlooking the Empire State Building, creditor representatives talked about the merits of a merger. They didn't like American's plan to stay independent, thinking they could get back more of the money they were owed through a merger.Horton stood firm, preferring to consider a merger only after American emerged from bankruptcy. Then came American's unions. David Bates, who was head of American's pilots' union at the time, was worried that the airline's plan would fail and the company would shortly return to bankruptcy. He also wanted to stop Horton from gutting his members' pay and benefits. So he turned to US Airways for a better deal. "If we had hope of a better outcome, I needed to move very quickly," Bates said. Through a mutual friend, he set up a dinner on March 12, 2012, with Scott Kirby, president of US Airways and Parker's right-hand man. They were both in New York for an investor conference and met at Oceana, an upscale seafood restaurant in the heart of Manhattan. Kirby had reserved a private table. It turned out to be in the kitchen. "It was private," Bates said. "Just noisy." Bates and another union leader -- Dennis Tajer -- ordered a mix of East Coast and West Coast oysters. A joke was made because US Airways has two separate unions, referred to as east and west. Kirby passed on the appetizer. "I found out he's not a fan of oysters," Bates said.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV