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American Airlines reconsiders merger opportunities

Seven months after the company entered bankruptcy, American Airline's CEO said the time has come for AA and its parent company, AMR Corp., too seek out a possible merger. Issuing a letter to the company's employees, the CEO explained that American Airline's has improved financially since it began bankruptcy restructuring, adding that a merger "could make the new American even stronger."

It is likely that any planned merger between AA and another airline or transportation firm would need to meet the approval of a number of government or industrial bodies. For instance, Business acquisitions involving transportation companies in Maryland often must accepted by the state's Public Service Commission and meet a number of other requirements before being finalized. This makes it important for companies involved in such a merger to seek qualified legal representation, ensuring the sale goes as smoothly as possible.

Since American Airlines filed for bankruptcy in November of 2011, a number of companies have been pushing for a merger, most notable US Airways. AA's CEO said he wished to wait until AMR was able to effectively cut operating costs, but a recent AMR management meeting aimed at considering new strategic options may mean the company is ready for such a merger.

US Airways has already begun gathering support from AA's three labor unions, promising them more advantageous concessions and fewer job cuts in the event of a takeover. AA was told by a bankruptcy judge that a merger might help the company emerge from bankruptcy more effectively.

Although AA is still losing money, it has inched ahead of many of its rivals. The company recently reported that revenue calculated for each seat flown one mile rose 8.6 percent in June, continuing an upward trend. Experts say the airline has effectively reduced costs by securing better contracts from ground workers and discontinuing flights that were not cost-effective.

Source: Charlotte Observer, "American Airlines chief: Merger back on table," David Koenig, July 11, 2012

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