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US Airways Signs Non-Disclosure Pact; American Merger Back On?
American Airlines has been pretty coy with its pushy suitor US Airways. Last month, American CEO Tom Horton told reporters the company’s long-rumored merger with US Airways probably wasn’t going to happen.
Now, it looks like a merger may still be on the horizon. The Street reports US Airways has signed a non-disclosure agreement with American. The agreement will allow the two airlines to share sensitive information with one another to help evaluate whether a merger would be mutually beneficial.
Nine months ago, American’s parent company, AMR Corp., filed for Chapter 11 bankruptcy. Ever since the filing, US Airways has been pushing for a merger between the two airlines.
Companies often file for Chapter 11 bankruptcy in order to restructure and become profitable again. In order to do so, companies often renegotiate labor contracts, close off branches, sell certain assets, or merge with another company.
American’s labor unions and US Airways CEO Doug Parker insist a merger is the best way for American to exit bankruptcy with its workforce intact. Last month, however, Horton told the press that a merger isn’t in American’s best interests and that it would actually be more advantageous to US Airways.
Horton must have come around. The non-disclosure agreement will allow the two companies to take a look at each other’s books and better evaluate the outcome of a merger. Under the NDA, the carriers have agreed not to publicly discuss their talks or enter merger talks with any third parties. However, both companies stress that the talks won’t necessarily lead to a merger.
The NDA signing has caused talks to cease between US Airways and AMR pilots for the time being. According to The Street, AMR pilots had already reached a tentative contract agreement with US Airways.
Related Resources:
- Talk to an Atlanta Bankruptcy Lawyer (FindLaw)
- US Airways Moves Toward AMR Deal With Pact to Share Books (Bloomberg)
- Corporate Bankruptcy: What Every Investor Should Know (FindLaw)
- US Airways Buys American Airlines’ Debt to Become a Creditor (FindLaw’s Phoenix Bankruptcy Law Blog)
2012-08-31 13:40:32
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