DOJ sues to prevent LCC/AMR link up

4. I currently own shares of AMR (Symbol: AAMRQ). How will my shares be affected by the closing of the Merger and the company’s emergence from Chapter 11?
If the Plan of Reorganization is confirmed by the Bankruptcy Court and the Merger is consummated, the existing common stock of AMR (AAMRQ) will be cancelled. Holders of Allowed AMR Equity Interests (including common stock, warrants, restricted stock units and options) will receive shares in the merged company, which is defined in the Plan and the Disclosure Statement as “New AAG,” representing at least 3.5% of the total number of shares of New AAG’s New Common Stock, subject to customary dilution, and may potentially receive additional shares of New Common Stock.

3
A hearing to consider confirmation of the Plan of Reorganization was held on August 15, 2013, and the Bankruptcy Court has taken the matter under advisement. We cannot predict whether the Plan of Reorganization will be confirmed by the Bankruptcy Court and consummated or when or whether the Merger will close. Further, we cannot provide assurance that the distributions of New Common stock described above will actually occur. We encourage you to review the Merger Agreement that was filed with the SEC as an exhibit to Form 8-K/A on February 14, 2013, the Form S-4 registration statement, as amended, initially filed with the SEC on April 15, 2013, as well as the Plan of Reorganization and Disclosure Statement filed with the Bankruptcy Court on June 5, 2013.

5. I currently own shares of AMR (Symbol: AAMRQ). When will I receive a distribution, if any?
If the Plan of Reorganization is confirmed by the Bankruptcy Court and the Merger is consummated, holders of Allowed AMR Equity Interests (including common stock, warrants, restricted stock units and options) will receive shares in the merged company, which is defined in the Plan and the Disclosure Statement as “New AAG,” representing at least 3.5% of the total number of shares of New AAG’s New Common Stock on the Effective Date of the Plan of Reorganization, subject to customary dilution.
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Looks like it's current as of 8/15. So stock will be canceled and you'll get some shares in the new company. Sounds to me like everyone is playing hot potato with it, lots of unknowns.

So maybe some smart people can clue me in. But even if there were no creditors outside of stock holders, the $900 million market cap would be converted into 3.5% of the new company, essentially valuing emerged new company at $25 billion (900 mil / .035) at the current stock price. That seems rather high.

Am I doing that right? I dunno. I'm really bad at this sort of stuff.
 
I talked to a good friend who is part of the merger team and the whole DOJ thing caught the company by surprise.

It literally brought everything to an abrupt halt.

Personally, we both think (which doesn't amount to jack squat of course) it has to do with promises made (and broken) after UAL + CAL and DAL + NWA.

"We're going to grow jobs in Memphis! Oh those U-Hauls are uhh, those other guy's U-Hauls... As I was saying... Big plans for this city!"
 
Derg said:
I talked to a good friend who is part of the merger team and the whole DOJ thing caught the company by surprise.

It literally brought everything to an abrupt halt.

Personally, we both think (which doesn't amount to jack squat of course) it has to do with promises made (and broken) after UAL + CAL and DAL + NWA.

"We're going to grow jobs in Memphis! Oh those U-Hauls are uhh, those other guy's U-Hauls... As I was saying... Big plans for this city!"
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Phoenix is definitely one of those cities, we're running scared!
 
Derg said:
I talked to a good friend who is part of the merger team and the whole DOJ thing caught the company by surprise.

It literally brought everything to an abrupt halt.

Personally, we both think (which doesn't amount to jack squat of course) it has to do with promises made (and broken) after UAL + CAL and DAL + NWA.

"We're going to grow jobs in Memphis! Oh those U-Hauls are uhh, those other guy's U-Hauls... As I was saying... Big plans for this city!"
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What's really scary is that basically American doesn't have a plan b if this falls out. Half the managers have taken their money and moved on. Not to mention Parker has seen pretty much all of Americans numbers and secrets. The doj knew this , why the hell did they wait basically till the last day to do anything?

In the end I don't think it will matter I'm pretty sure good thing will be resolved before trial. I say give up all of dca if its such a big deal. I can get five guys in other airports.
 
Probably because they treated it as a foregone certainty.

It was like full steam ahead at integration then, late that afternoon, it came down from the person's manager to "Stop everything until further notice"

I think they'll get their merger, but another flavor of it. I think there's a little bit of the ghosts of Memphis, Cincinnati, Minneapolis, Houston (HQ), Honolulu, Anchorage and maybe a light sprinkling of Atlanta (from the Air Tran perspective) starting to materialize in the dust swirl.

Arizona is enjoined in the lawsuit and the average Phoenician that thinks AA isn't going to gut PHX in favor of DFW is on the Peyote. AGAIN, this is my uneducated humble opinion, but I bet you they're looking for stronger job guarantees.

You won't find a bigger USAirways-West cheerleader that doesn't actually work for the airline than I.
 
wheelsup said:
If true why is the stock priced so low? I see it was around $0.40/share last year, but since went up to $7.00. Now down to $2.75 or so with a market cap of under $1 bil. I would assume the company is worth much more than that buy itself even without merging. Why the huge selloff?
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The selloff occurred right after it was announced the DOJ filed to block the merger earlier in the week. We sat in recurrent and watched it freefall on our phones. Basically, people snapped it up at pennies on the dollar once they realized it wasn't going to be invalidated, and people watched it rise as they expected to cash on the new "world's largest airline". When the chance of the merger folding came up, people dumped it like yesterday's garbage as fast as possible.
 
Derg said:
I talked to a good friend who is part of the merger team and the whole DOJ thing caught the company by surprise.

It literally brought everything to an abrupt halt.

Personally, we both think (which doesn't amount to jack squat of course) it has to do with promises made (and broken) after UAL + CAL and DAL + NWA.

"We're going to grow jobs in Memphis! Oh those U-Hauls are uhh, those other guy's U-Hauls... As I was saying... Big plans for this city!"
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No kidding. Memphis was more or less promised from Anderson himself that the hub would stay and would at least keep the same number of flights they had. So, they go out, finish the new tower and build this ginormous parking garage. Fast forward a couple of years, and they're on their knees begging Southwest to ramp up operations since Delta left them as just another outstation with a few random point-to-point flights. No surprise the TN lawyers got invovled, although I'm not really sure why. It's not like US Airways/American have large operations anywhere in the state. For Memphis, at WORST they lose 4 flights, maybe. 2 to DFW or CLT. Not sure about BNA, TYS or CHA, but pretty much all involved with AMR/US Airways out that way are regional flights.

What I'm mostly hearing is that consumers are worried that prices to visit grandma might creep up to a realistic level rather than "OMG! I'M CRAZY DAVE AND MY TICKET PRICES ARE INSAAAAANE!" fare sales. Wanna fly cheap? Fly Spirit or Allegiant. That's the niche they fill. But then they'll complain about all the added fees. The entitlement mentality in this country (I want something for nothing, and I want high quality something for nothing) is killing me.
 
I agree with some of the op ed pieces in the WSJ. The industry has been more or less in shambles losing money since deregulation in the 80's. It's taken 30 years for the industry to right itself where they can make money, and now the government is ready to jump in again.

I tend to agree that if this merger doesn't go through look for another attempted merger, one that wouldn't create the world's largest airline. US Air clearly wants to merge and AA may not be big enough to survive without one.
 
Derg said:
I talked to a good friend who is part of the merger team and the whole DOJ thing caught the company by surprise.

It literally brought everything to an abrupt halt.
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Uhm, did they really not expect some regulatory push-back and plan accordingly?
 
It all seems very political. Maybe these states are trying get some guarantees from parker? Maybe they tried before and he wasn't going to give them. I've heard he's got a bit of an ego even for an airline ceo.
 
My real question is "What is DOJ's desired end state?" If it is to promote competition by blocking the merger wholesale to keep four legacy carriers in the market, then that goal may fail if either USAir or AA go under. The resulting fire sale of gates and assets to the three remaining legacies would limit competiton more than the original merger ever would have. Instead, if DOJ wants to dive deep to ensure there's adequate competition in specific markets and routes then there's much negotiating room. I think DOJ's view is the later...
 
kellwolf said:
No kidding. Memphis was more or less promised from Anderson himself that the hub would stay and would at least keep the same number of flights they had. So, they go out, finish the new tower and build this ginormous parking garage. Fast forward a couple of years, and they're on their knees begging Southwest to ramp up operations since Delta left them as just another outstation with a few random point-to-point flights. No surprise the TN lawyers got invovled, although I'm not really sure why. It's not like US Airways/American have large operations anywhere in the state. For Memphis, at WORST they lose 4 flights, maybe. 2 to DFW or CLT. Not sure about BNA, TYS or CHA, but pretty much all involved with AMR/US Airways out that way are regional flights.

What I'm mostly hearing is that consumers are worried that prices to visit grandma might creep up to a realistic level rather than "OMG! I'M CRAZY DAVE AND MY TICKET PRICES ARE INSAAAAANE!" fare sales. Wanna fly cheap? Fly Spirit or Allegiant. That's the niche they fill. But then they'll complain about all the added fees. The entitlement mentality in this country (I want something for nothing, and I want high quality something for nothing) is killing me.
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Tennessee is still sore over American closing their hub in BNA. Arizona knows that they'll just become a focus city for the new American plus the loss of the US HQ in Tempe. I have no clue why the Texas AG is involved since, they're making out like a bandit if this merger does go through!
 
H46Bubba said:
Tennessee is still sore over American closing their hub in BNA. Arizona knows that they'll just become a focus city for the new American plus the loss of the US HQ in Tempe. I have no clue why the Texas AG is involved since, they're making out like a bandit if this merger does go through!
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He's running for Governor.
 
Seggy said:
Do the Airways guys really think that this won't go through?
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I think its 50/50 depending on who you ask and how much of a glass full/empty kind of guy you are. Keep in mind that many of the old timers at USAir have had cursed careers.
 
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