The big question on Wall Street these days is will a US Airways-AMR merger occur or will American Airlines' parent company successfully emerge from bankruptcy on its own.
Bondholders, according to this Bloomberg News article, think the answer is yes, there will be a merger. Citing sources, Bloomberg says bondholders have formed ad hoc groups to gain more leverage in the bankruptcy process.
"The most-actively traded debt, $460 million of 6.25 percent convertible, unsecured notes due 2014, have almost quadrupled to 66 cents on the dollar from 17.75 cents on Nov. 29, when AMR filed for bankruptcy, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt jumped 3.3 cents on July 19 after the chief executive officers of the airlines met to discuss a merger.
"US Airways CEO Doug Parker is negotiating directly with AMR bondholders outside of the court process, and David Tepper's Appaloosa Management LP has teamed with other investors to push for a bigger payoff. Fort Worth Texas-based AMR is pursuing a stand-alone strategy that includes boosting revenue, a course that Vicki Bryan of New York-based debt researcher Gimme Credit LLC said isn’t seen as viable by bond owners.
"'The fact that the bonds are recovering shows that the unsecured creditors think there will be a deal,' Bryan, a senior bond analyst, said in a telephone interview. 'No one is confident about their revenue generation plan. It’s worth more only on the idea that someone else will buy it.'"