* US Air's Parker to be CEO, Horton chairman till early 2014
* Merged airline seen valued between $10.5 bln and $11 bln
* Boards to meet within days to vote on deal-sources
By Soyoung Kim
NEW YORK, Feb 9 US Airways Group Inc and
AMR Corp are nearing an $11 billion merger that would
create the world's largest airline and could announce a deal
within a week, after resolving key differences on valuation and
management structure, people familiar with the matter said.
Under terms of a deal that are still being finalized, US
Airways Chief Executive Doug Parker would become CEO, while
AMR's Tom Horton would serve as non-executive chairman of the
board until spring of 2014, when the combined company holds its
first annual meeting, the sources said.
The deal would come more than 14 months after the parent of
American Airlines filed for bankruptcy in November 2011, and
would mark the last combination of legacy U.S. carriers,
following the Delta-Northwest and United-Continental mergers.
The all-stock merger is expected to value the combined
carrier at between $10.5 billion and $11 billion, and would give
AMR creditors 72 percent of the ownership in the new company and
US Airways shareholders the rest, they said.
The board of each airline is expected to meet in the middle
of the coming week to vote on the proposed deal, and an
announcement would likely come in the latter part of the week,
the sources said, asking not to be named because the matter is
Negotiations are continuing and could still be delayed or
fall apart, they cautioned.
The companies had initially tried to schedule board meetings
for Monday, the day that AMR's creditors committee planned to
convene, and had aimed to announce a deal as soon as Tuesday,
sources told Reuters previously.
But AMR needed more time to finalize details and the boards
of the two airlines are now not expected to gather until around
Wednesday, the sources said.
The AMR creditors committee is still meeting on Monday in
New York, as initially scheduled, and will continue discussions
as the airlines finalize negotiations, they added.
A lawyer for the creditors committee declined to comment.
Representatives for AMR and US Airways declined to comment.
A combination with US Airways would create the world's top
airline by passenger traffic and help the two carriers better
compete with rivals United Continental Holdings and
Delta Air Lines Inc.
A near-$11 billion valuation of the combined American-US
Airways compares to some $12.4 billion market capitalization for
Delta, and $8.7 billion for United Continental.
The currently planned equity split ratio between AMR
creditors and US Airways shareholders implies a roughly $3
billion valuation for US Airways and some $7.5 billion to $8
billion valuation for AMR.
NEW AMERICAN AIRLINES
US Airways will follow through on its agreement with AMR
labor unions last year that the combined carrier would be
branded American Airlines and be based in Fort Worth, Texas,
where AMR is currently based, sources said. US Airways has its
headquarters in Tempe, Arizona.
As part of the merger, US Airways will also leave the Star
Alliance to join the oneworld global airline alliance, of which
American Airlines is an anchor member along with British
Airways, the people familiar with the matter said.
The airlines are estimating that a merger will bring about
$1 billion in revenue and cost benefits, they said.
Horton rebuffed an aggressive takeover push from US Airways
early in the bankruptcy process, saying the airline preferred to
exit court protection on its own and consider a deal later. But
after several months of talks with its own creditors as well as
with US Airways, Horton has softened his approach and agreed to
consider all options.
A combined American-US Airways would provide the scale to
match bigger rivals that are upgrading service and expanding
international routes. The merged company would have revenue of
$38.69 billion based on 2012 figures, ahead of United
Continental which had revenue of $37.15 billion last year.
The new American would have a solid presence on the
important U.S. East and West coasts and on North Atlantic
routes, given American's revenue-sharing joint venture with
British Airways and Iberia.