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American Airlines says it will seek reorganization filing extension through Dec. 27


American Airlines announced Friday afternoon that it has agreed with the unsecured creditors’ committee appointed in its Chapter 11 case to jointly seek to extend the exclusive period during which only the company can file a reorganization plan through Dec. 27.

The company did not state whether it would also seek to extend the corresponding exclusive period to solicit acceptances to its plan, but such a period typically expires two months after the plan-filing period. For American, that would translate into an extension of the exclusive solicitation period through Feb. 27, 2013.

The company’s current plan-filing exclusivity does not expire until Sept. 28.

The company provided no additional information, and as of this afternoon, the motion has not yet been filed, according to the court docket.

As the company continues to seek to negotiate new labor agreements with its unions, the maintenance of exclusivity will be key to holding off an unwanted takeover from US Airways while in Chapter 11. US Airways has talked up a merger with American that can bring the company out of Chapter 11, while American has insisted it wants to reorganize pursuant to a standalone plan, but that it would consider a merger once it is out of bankruptcy court.

As reported, US Airways has already reached agreements with the three unions – the Allied Pilots Association, the Professional Flight Attendants Association, and the Transit Workers Union – that represent some 55,000 American employees that would kick in if a merger takes place. But US Airways’ hands are tied as long as American has the exclusive right to file a reorganization plan.

The deal between US Airways and the three American unions has been generally seen as providing all parties with additional negotiating leverage, with American squeezed in the middle. Over the past week, however, that landscape appears to have, if not quite yet changed, shifted slightly. American now has a “tentative agreement” with its pilots union that has the approval of the APA board of directors, with the union’s membership slated to vote on the new pact by Aug. 8. Meanwhile, additional talks are scheduled next week between American and the APFA and TWU, and American has signaled that it has some flexibility when it comes to demanding concessions from its workers, although it is unclear whether this flexibility is enough to meet the unions’ respective demands.

Still, now that the company’s pilots have been offered a 13.5% equity stake in the reorganized company, APA president Capt. David Bates noted earlier this week that the company’s value – and thus the value of the pilots’ stake – would increase whether the US Airways merger were to occur before or after American’s emergence from Chapter 11.

That appears to have raised some questions about the APA’s commitment to its agreement with US Airways.

“We’ve received questions from some about whether APA continues to support a merger between American Airlines and US Airways in light of the tentative agreement,” the APA said in message last night to members. “To be clear, the APA leadership remains convinced that a merger of the two carriers would create a stronger, more competitive American Airlines, and that our future career prospects will be brighter than they would otherwise be under AMR management’s stand-alone plan. Our support for proceeding with the merger is undiminished.” – Alan Zimmerman

 

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