Friday, January 13, 2012

AMR Merger Speculation Heats Up

Though a deal is likely months away multiple news outlets today reported that three entities are considering making a play for AMR. See Gina Chon, Susan Carey & Mike Spector, Rivals Eye American Airlines, Wall St. J., Jan. 13, 2012 (available here). Delta, US Airways and private equity firm TPG Capital are all reportedly evaluating an acquisition of the bankrupt carrier. According to the Wall Street Journal story, Delta believes it can make the concessions necessary for a merger to win approval by U.S. regulators. However, not all analysts believe such a deal could survive antitrust scrutiny and some have suggested that Delta's involvement may be intended to complicate other potential deals. See Mary Schlangenstein, AMR as 'Last Plum' Stirs Interest After Airline Ranks Cut, Bloomberg Business Week, Jan. 13, 2012 (available here). Additionally, a merger with Delta could face difficulties with foreign competition authorities as losing AMR to Delta's SkyTeam alliance would be a serious blow to oneworld, leaving only two viable international alliances. See Doug Cameron, Delta, AMR Might Not Clear Foreign Regulators, Wall St. J. Deal Journal, Jan. 13, 2012 (available here). A merger with US Airways would be a much easier decision for regulators given that US Airways is only the fifth-largest U.S. carrier (Delta is second, AMR third) and does not have any overlapping hubs.

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