American Airlines Debt Holders Vote On Reorganization Plan

July 30, 2013
Assuming creditors accept the plan, the court has scheduled an Aug. 15 confirmation hearing that could be the final court meeting in the case.

July 30--Creditors of American Airlines and AMR Corp. finished voting Monday on whether to end the airline company's 20-month bankruptcy reorganization case, but it may be more than a week before results are released.

AMR's debt holders had until 4 p.m. to submit their support or opposition to American Airlines' reorganization plan, which hinges on a merger with Tempe, Ariz.-based US Airways Group to create the world's largest airline.

More than 50 percent of the debt holders need to vote yes for the plan, as well as debt holders that hold at least two-thirds of the accounted-for debt.

The ballots are in the hands of GCG Inc., a legal services firm in New York. GCG has until Aug. 8 to submit the voting results to Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York, where the case is being litigated.

Fort Worth-based AMR, parent company of American Airlines and American Eagle, is reaching the final stages of one of the largest bankruptcies in U.S. history. The case is reshaping the company, forcing it into a merger that executives initially resisted.

American has more than 6,000 employees at its Tulsa Maintenance & Engineering Center, a facility at Tulsa International Airport that is the airline's primary jet overhaul and repair shop.

Assuming creditors accept the plan, the court has scheduled an Aug. 15 confirmation hearing that could be the final court meeting in the case.

After massive layoffs, salary and wage cuts and tense negotiations with labor unions, AMR could emerge from court proceedings sometime toward the end of August.

Few expect significant opposition from creditors, since leaders of American Airlines and US Airways have said debt holders should be paid in full as a result of the merger. In fact, the Official Committee of Unsecured Creditors in the case recommended in May that debt holders support the reorganization plan.

American listed more than $30 billion in liabilities when it filed bankruptcy on Nov. 29, 2011, including money owed to airplane manufacturers, banks, airports, and computer and technology companies.

Most of the debt holders have a major financial interest in seeing American emerge as a successful airline.

Chicago-based Boeing Co., which is owed about $30 million, has orders for hundreds of planes from AMR and is counting on the airline to take delivery of hundreds more jets during the next decade as the company revitalizes its aging fleet.

AMR owes Dallas-Fort Worth International Airport about $11 million in the case, but the airport relies on American to operate a hub and drive traffic for landing fees, terminal rental and income for concessions there.

The list of creditors is numbered in the thousands and spans billions of dollars, all of which will be paid back in stock issued after the merger.

After the votes are tabulated, Lane can consider whether or not to approve AMR's reorganization plan and the legality of controversial issues such as CEO Tom Horton's nearly $20 million payout package to step aside as CEO and become chairman of the new American Airlines Group Inc. for one year after the merger.

The deadline for objections to the reorganization plan is 3 p.m. Tuesday.

Key dates in AMR Corp. bankruptcy case

Monday: Deadline for creditors to vote on reorganization plan

Tuesday: Deadline for objections to reorganization plan

Aug. 8: Creditor vote totals must be submitted to bankruptcy court

Aug. 15: Judge Sean Lane to hold confirmation hearing and consider AMR Corp.'s plan to exit bankruptcy

Kyle Arnold 918-581-8380

[email protected]

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