American willing to consider merger options

Washington DC
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American Airlines parent AMR Corp has agreed to discuss potential merger options, backing off its demands to be left alone to complete a financial restructuring under bankruptcy protection.

The move opens the door for potential take-over bids by rivals that include US Airways and Delta Air Lines, but does not automatically mean a merger will take place.

US Airways has been actively lobbying the unsecured creditors committee to force AMR's management team and board of directors to consider a merger.

"We are very pleased" by AMR's decision, US Airways says in a statement. "The unsecured creditors committee should be recognised for its efforts and we look forward to working with the committee in the process going forward."

Three of AMR's largest unions, with seats on the creditors committee, have already endorsed US Airways' merger strategy.

American Airlines' unions will be exposed to fewer job cuts under the US Airways plan. The Tempe-based airline also emphasises that a merged carrier would become the dominant airline on the East Coast, and strengthen American's position against a merged United-Continental in Chicago.

Until today, however, AMR refused to consider US Airways' public offer. AMR's management wanted to complete its plan to restructure the airline by slashing annual costs by $2 billion, including a nearly $1.3 reduction in salaries and benefits. AMR's plan also calls for boosting annual revenues by $1 billion, mainly by replacing most 50-seat aircraft with 70-90-seat jets and increasing international traffic.