More Videos:

AMR Pilot Deal Would Help Merger: Analyst

Tickers in this article: LCC

CHARLOTTE, N.C. -- (TheStreet) -- A tentative contract deal between AMR (AAMRQ.PK) and its pilots removes an impediment to a possible merger with US Airways (LCC) , said a leading airline analyst.

AMR and the Allied Pilots Association reached an agreement in principle on Friday. The union said it provides "an industry standard contract while enabling American Airlines to complete a successful restructuring and compete on a level playing field with its network-carrier peers." Pilots have yet to vote on the deal.

In a note issued Tuesday, J.P. Morgan analyst Jamie Baker wrote that investors have asked whether the deal represents "labor détente, thereby diminishing the prospects for consolidation." He said the opposite is true.

"A stand-alone plan inclusive of a pilot contract is a must-have for AMR's unsecured creditors committee, in our view, so that it may be compared to the merits of a merger," Baker wrote. "Quite frankly, two plans are expected to come under consideration, and the lack of a completed stand-alone plan threatened to weigh down the process."

Baker said he believes that creditors will likely have the opportunity to review competing plans by early next year. American has until Jan. 28 to file its restructuring plan with the bankruptcy court after Judge Sean Lane last week granted a request, backed by the unsecured creditors committee, to extend the filing period by one month.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed .

Usage of this site is governed by TheStreet's Terms of Use available here. Information collected on this site may be collected by TheStreet and OC Register. TheStreet's use of information collected on this site will be governed by TheStreet's privacy policy available here. OC Register's use of information collected on this site will be governed by OC Register's privacy policy available here. If either TheStreet's or OC Register's privacy policy have provisions that are more restrictive than the provisions of the other party's privacy policy, such more restrictive provisions shall not apply to such other party.

Copyright © 2012 Orange County Register Communications. All Rights Reserved.
Site Help | Site Map