AMR DOJ suit settlement approved; expected plan effective date Dec. 9

By Caroline Salls

Pittsburgh, Nov. 27 - AMR Corp. received court approval of the lawsuit settlement reached with the Department of Justice and several states in connection with the merger of AMR subsidiary American Airlines and US Airways Group, Inc., according to an American Airlines news release.

In addition, the court ruled that the merger may be completed despite the pendency of a previously reported private antitrust lawsuit.

As a result of these rulings, AMR filed notice with the U.S. Bankruptcy Court for the Southern District of New York that the proposed effective date of its plan of reorganization will be Dec. 9.

The company said the plan effective date and merger are expected to be completed before the opening of the securities market on Dec. 9.

Under this expected schedule, the last day of trading of all outstanding securities of AMR, including the common stock trading under the symbol AAMRQ and the common stock of US Airways Group will be Dec. 6.

Upon closing of the merger, AMR will be renamed American Airlines Group Inc., with its common stock to be listed and traded on the Nasdaq Global Select Market under the symbol AAL and its preferred stock under the symbol AALCP.

When the plan takes effect and the merger closes, each outstanding share of US Airways Group common stock will be converted into one share of American Airlines Group Inc. common stock and substantially all pre-Chapter 11 unsecured claims against and outstanding equity securities of AMR will be satisfied by American Airlines Group Inc. common stock or preferred stock in accordance with the plan.

DOJ lawsuit settlement

Under the lawsuit settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport (DCA) and 17 slot pairs at New York LaGuardia Airport (LGA), as well as some gates and related facilities to support service at those airports.

The airlines also will divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles International Airport and Miami International Airport. The divestitures will occur through a DOJ-approved process following the completion of the merger.

Despite the divestitures, the companies said the new American is still expected to generate more than $1 billion in annual net synergies beginning in 2015, as was estimated when the merger was announced in February 2013.

After completion of the required divestitures, the combined company expects to operate 44 fewer daily departures at DCA and 12 fewer daily departures at LGA than the roughly 290 daily DCA departures and 175 daily LGA departures that American and US Airways operate today.

The divestitures required by the settlement are not expected to impact total employment at the new American.

To ensure much of the service currently operated by the carriers to small- and medium-sized markets from DCA is maintained, the new American has agreed with the Department of Transportation to use all of its DCA commuter slot pairs for service to these communities.

The new company will announce the service changes that will result from the divestitures in advance of the sale of the DCA and LGA slots, so that the airlines acquiring those slots have the opportunity to maintain service to those impacted communities.

States agreement

Under a settlement agreement with the state attorneys general, the new American will maintain its hubs in Charlotte, New York (Kennedy), Los Angeles, Miami, Chicago (O'Hare), Philadelphia and Phoenix consistent with historical operations for a period of three years.

In addition, with limited exceptions, the new American will continue to provide for five years daily scheduled service from one or more of its hubs to each plaintiff state airport that has scheduled daily service from either American or US Airways.

A previous settlement agreement with the state of Texas will be amended to make it consistent with the most recent settlement.

AMR Corp., the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29, 2011. Its Chapter 11 case number is 11-15463.

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