Every Friday, Wolfe Trahan analyst Hunter Keay sends out an investor note, updating his clients on the latest news in the airline industry.
And this week, with a bankruptcy judge ruling to allow American Airlines parent, AMR Corp., to reject its pilots contract, Keay had plenty to talk about.
But he chose to zero in on a comment made by the Unsecured Creditors Committee attorney Jack Butler, who told the court on Tuesday that the committee will require American to have a pilot contract in place before signing off on a restructuring plan. That comment, Keay said, may mean that the chances for a merger between US Airways and American have increased.
"We believe the comment from Mr. Butler itself was a significant one because it now seems apparent that the UCC will not support a plan of reorganization without labor buy in, and AMR pilots seem likely to reject whatever is proposed to them by the AMR management team. Wouldn't that then seem to give AMR pilots the power to control the process? If the comment from Mr. Butler is to be interpreted literally and without caveat, we think that means a merger between AMR and LCC while AMR is in bankruptcy is now substantially more likely," Keay wrote in his note.
With American and US Airways signing a non-disclosure agreement two weeks ago, Keay estimated that a merger announcement could come within a few weeks at the earliest or by the end of the year at the latest.
The pilots will get a new contract, all right - the one the judge allows American's management to impose on them.
Problem solved. And no need for Doug Parker to ride to the rescue.
Posted by: Richard | September 11, 2012 at 06:06 PM