The Wall Street Journal says that the proposal was sent via letter — not quite as romantic — on April 20 by US Airways CEO Doug Parker to AMR CEO Tom Horton (along with the creditors committee for the bankrupt airline; think of them as the old aunts and grandmothers that walk 20 paces behind to chaperone the date).
But apparently the letter didn’t go over very well with American, which didn’t even offer a formal response, reports the Journal. A big sticking issue was US Airways’ suggestion that its shareholders retain 50.1% control of the combined carriers, leaving American’s creditors with 49.9%.
Even with the $1.5 billion in new debt that US Airways proposed to issue and hand over to American’s creditors, the AMR folks felt that they would still get the short end of the stick if the merged airline — would would surpass United to become the largest carrier the U.S. by traffic — were successful.
It’s worth noting that this first proposal also came before American had renegotiated labor contracts with its unions about what would happen in the case of a merger.
US Airways reportedly took a second swing at the proposal in November, a full year after American first entered bankruptcy protection. That proposal was much sweeter than the April offer, with the split of the combined airlines being 70%-30% in favor of American’s creditors. However, U.S. Airways’ Mr. Parker would control the merged carrier, which would be worth an approximate $10 billion.
The Journal reports that AMR’s Mr. Horton sent out a memo earlier this month saying that a decision to go ahead with the merger or to remain sexy and single could come “within a matter of weeks.”
As for regulatory concerns, the fact that the two carriers do not really overlap when it comes to routes or hubs is a factor that could make the merger less of an antitrust concern to investigators.