By filing now, with ample unrestricted cash, the company is likely to have more
control over the restructuring process. We expect AMR to emerge as a smaller,
lower cost, more sustainable entity, and view today's news as good for the
industry.
By filing with $4.1 billion in unrestricted cash, AMR expects to avoid the
customary need for debtor-in-possession (DIP) financing, and in the process is
likely to retain more control over its reorganization. The key implication for
us of that belief is that it reduces the odds that US Airways (LCC, Buy) might
be able to persuade creditors to agree to a merger, as it attempted
(unsuccessfully) during Delta's (DAL, Buy) reorganization.
For additional analyst commentary and analysis on pensions, scope, merger,
foreign ownership and airline historical time spent in Chapter 11, click here.
AMR CEO Tom Horton: "It's Not All About Labor Costs"
During a recent CNN interview, AMR's newly appointed CEO Tom Horton responded to
a question about the timing of AMR's Chapter 11 filing by saying, "it's not all
about labor costs, of course, because as the other airlines have gone through
restructuring they have addressed their capital structure, their debt, their
facilities, there are many other things, their fleet, many other things to be
considered and addressed in this process and re-optimized and that's what we're
going to do and we're going to do it in a way that makes the company much more
successful."
Good Luck DUI DOUG!