Thursday, November 29, 2012 4:57 pm
Creditors group backs new board at stand-alone AMR
By DAVID KOENIGAP Business Writer
The group represents financial investors that, as of a court filing in September, included J.P. Morgan Chase & Co. and various investment firms that hold bonds issued by AMR, which filed for bankruptcy protection a year ago Thursday.
The informal or ad hoc group is not part of the official unsecured creditors committee in the bankruptcy case, but it is seeking to influence AMR's reorganization.
"Our support for a stand-alone Plan of Reorganization for AMR will be conditioned, among other things, on that Plan providing for the naming of a new Board of Directors," wrote a lawyer for the group, Gerard Uzzi.
The group expects that most members of the new board would have no previous connection to AMR. The new board's duties would include selecting executives to run the company after bankruptcy, Uzzi wrote in a letter to the union for American Airlines pilots.
A spokesman for AMR said the company declined to comment on the letter.
It's not unusual for corporate boards to be reshuffled during bankruptcy, although pressure from creditors is usually applied away from public view. Many things in AMR's bankruptcy case have proven to be unorthodox, including the highly public pursuit of AMR by smaller rival US Airways Group Inc.
If AMR comes out of bankruptcy as an independent company, it is likely to be led by current executives including CEO Thomas W. Horton. If US Airways can persuade AMR creditors to demand a merger, the combined airline might be run by the US Airways team and its CEO, Doug Parker.
Vicki Bryan, an analyst for bond-research firm Gimme Credit, said the ad hoc group is a relatively small creditor with $885 million in AMR bonds, but others "might listen and potentially support the idea" of a new board.
"It is possible that this group could actually be planning to replace the board with members favorable to an AMR merger," which could produce a faster and "more promising" recovery for the troubled company, Bryan said. She said keeping AMR's current management would lead to continued "bad blood" between it and labor unions.
The ad hoc group's letter was written Nov. 15 by Uzzi, a lawyer for the New York firm of Milbank, Tweed, Hadley & McCloy LLP, to Allied Pilots Association President Keith Wilson. It was first reported by Bloomberg News.
It comes as American's 7,500 pilots are voting on a proposed contract that would boost their pay in line with pilots at United Airlines and Delta Air Lines after three years and give American's pilots 13.5 percent of the stock in the restructured company. In exchange the contract would reduce benefits and allow American to outsource more flying.
The pilots - along with American's union flight attendants and ground workers - support a merger and already have conditional labor deals with US Airways.
Dennis Tajer, a union spokesman, said the Uzzi letter was a commitment from "a significant creditor group" to help select the right leadership and strategy for American Airlines.