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The Deal: AMR Resists Pondering Life Without US Air

Stocks in this article: LCC

"If I were in the debtor's shoes, I'm not sure I would be doing anything different," said Lawrence Perkins, CEO of SierraConstellation Partners, a restructuring firm. "It's a fairly elegant exit from bankruptcy with a deal that, if approved, would be fantastic. The debtor says, 'If you close, our job is done. If regulators get in the way, they get in the way.'"

Since filing for Chapter 11 on Nov. 29, 2011, AMR has been able to get post-petition financing. According to The Deal Pipeline, the company has raised five debtor-in-possession financings worth more than $3.6 billion. Besides some $268 million that will be used to buy 10 aircraft, the rest of the DIP money is for operations. When the carrier reported second-quarter results, it said its cash is $7.1 billion, about $1.3 billion higher than at the same time last year. And that's not even counting the $3.25 billion in two exit financings it has yet to seek.

Still, AMR is clearly worried about financing a lingering bankruptcy, as evidenced by its efforts to get a Nov. 12 trial date, and Perkins noted that just because the company has found DIP money before doesn't mean it'll continue to.

"Most likely they're going to need it and most likely it's going to be difficult to come by," Perkins explained. "That must be an option they're exploring then they're looking at their menu of options. DIP financing is usually a proxy for time in a bankruptcy case and it's going to be tough to get it."

Meanwhile, AMR's unions have stayed quiet. While strongly behind the merger, the Transport Workers Union, which represents 26,000 American Airlines workers, is confident the carrier can reorganize if the deal doesn't happen, according to Jamie Horwitz, a union spokesman.

"We negotiated agreements with American Airlines that, if it remains as a standalone carrier, our members would have contracts that protect them, contracts that will provide them with a wage increase in future years," he said.

No stirrings have surfaced among secured creditors, either, who stand to be paid in full in cash on their more than $10 billion in claims if the merger succeeds. That's not surprising, since at least 88% of the creditors in each class approved the current plan. Whether that payoff would remain in a reorganization is unknown, however.

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