* Group to only fund bankruptcy exit plan if board replaced
* US Airways making aggressive takeover push
* US Airways has support from AMR unions
By Nick Brown
NEW YORK, Nov 28 A group of some of bankrupt
American Airlines' most significant bondholders said
it will not support a standalone restructuring unless a new
board is brought in, a move that may increase hurdles for Chief
Executive Tom Horton and his team.
The 12-member bondholder group, which includes JPMorgan
Chase & Co, Pentwater Capital Management and York
Capital Management, is the primary well-organised group to have
expressed an interest in funding an independent exit for the
airline's parent company AMR Corp.
AMR filed for bankruptcy in November 2011, seeking to reduce
Entities that gain a controlling equity stake in a company
through bankruptcy routinely appoint new boards, and those
boards do not necessarily oust the company's incumbent managers.
But AMR's current management team, led by Horton who is also
chairman of the board, has lost the confidence of the company's
unions, which support a takeover bid by smaller competitor US
The bondholders, who hold more than $700 million in AMR
debt, said in the letter to Keith Wilson, president of
American's pilots' union, its support for an independent exit
was "conditioned, among other things, on that plan providing for
the naming of a new board of directors."
It added that the new board would be selected with input
from other shareholders.
That could include the pilots' union if the union votes to
ratify a proposed labor contract offering it a 13.5 percent
equity stake in the company, which means Horton's future at the
company could depend on his ability to convince other
shareholders of his team's leadership credentials.
"The board will ... be responsible for selecting a
management team," the bondholders said in the letter. "We expect
the board to share our view that an important criteria for
selecting the leader of that team will be a demonstrated ability
to maximize shareholder value."
The letter, sent on Nov. 15, was not public, but the Allied
Pilots' Association made it available to its 8,000 members on
Wednesday and a copy was obtained by Reuters.
A spokesman for AMR declined to comment on Wednesday.
The circulation of the letter may also signal an attempt by
the union to nudge its members toward ratifying the new labor
contract proposed by AMR.
Resolving the bitter, years-long labor dispute between AMR
and its pilots is a top priority for the company and its
creditors, as AMR tries to convince investors of its long-term
The bondholders' commitment to work cooperatively with
shareholders "shows that APA's 13.5 percent equity claim is of
critical importance in shaping what the new American Airlines
will look like and who will lead it," the union said in a
statement circulated to its members along with the letter.
A vote on the proposed contract is set for Dec. 7.
The case is In re AMR Corp et al, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.