Tags: AMR | CEO | Takeover | jobs

AMR CEO Warns Jobs Will Be Cut, 'Opportunists' May Attempt Merger

Thursday, 15 Dec 2011 01:15 PM

American Airlines, currently restructuring in bankruptcy, should be braced for "opportunists" sniffing out merger possibilities and is also likely to cut jobs, the airline's chief executive said on Thursday.

"We will have some input in the process from several interested parties, and we need to get used to that," Tom Horton said in a letter to employees.

"There will be outside parties who may try to knock us off our path," Horton said. "Some will say we should shrink the company dramatically, close hubs and lay off thousands more to create the greatest value for creditors. Some will say the company should be sold or broken up. And as we've seen before in this industry, there may be opportunists who wish to acquire our company while we are in this situation."

The AMR Corp unit filed for Chapter 11 bankruptcy protection on Nov. 29, citing a need to cut costs to match those of rival airlines that are profitable.

Many airline industry experts believe US Airways Group, whose leader Doug Parker is a strong proponent of airline consolidation, will make a bid for American Airlines, the third-largest U.S. airline, while it restructures.

Bankruptcy can create opportunities for potential bidders as the court and company creditors review the best possible reorganization path for a troubled company.

US Airways tried and failed to buy Delta Air Lines while that company was in bankruptcy. Delta rebuffed the bid and later merged with Northwest Airlines.

US Airways, the product of a 2005 merger with America West Airlines, declined to comment on Thursday on its merger prospects in light of the American Airlines bankruptcy.

In a Nov. 29 news conference, Horton deflected questions about American's merger prospects, saying the company was focused on restructuring.

In his letter on Thursday, the CEO said American Airlines aims to rework its debt and aircraft leases. He said the company will need to ground planes and resize its network.

"And, regrettably, we will most certainly end the process with fewer people than we have today," he said. "And as part of the restructuring process, we'll need to finally agree upon next-generation, competitive labor contracts."

American has long complained about high labor costs relative to its peers. The company filed for bankruptcy after failing to reach a deal with its unionized workers, including pilots, after years of fruitless talks.

© 2017 Thomson/Reuters. All rights reserved.

 
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American Airlines, currently restructuring in bankruptcy, should be braced for opportunists sniffing out merger possibilities and is also likely to cut jobs, the airline's chief executive said on Thursday. We will have some input in the process from several interested...
AMR,CEO,Takeover,jobs
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2011-15-15
Thursday, 15 Dec 2011 01:15 PM
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