US Airways, American Agree to Open Their Kimonos (LCC, JBLU, ALK, UAL, DAL)

Bankrupt AMR Corp. and US Airways Group Inc. (NYSE: LCC) have announced that the two companies have entered a nondisclosure agreement (NDA), under which the companies have agreed to exchange certain confidential information and, in close collaboration with AMR's Unsecured Creditors Committee, to work in good faith to evaluate a potential combination.

As part of the agreement, both AMR and US Airways have agreed not to discuss any potential combination with other parties.

AMR, the parent of American Airlines, sent an NDA to US Airways more than a month ago and it has taken until now to get the agreement signed. The Wall Street Journal reports that more details are not available, but that the agreement is "believed to be several months in duration and prohibit US Airways from talking up the combination publicly or continuing its merger negotiations with American's unions or its own labor groups."

AMR has long said that it would enter into merger talks only after the company emerged from bankruptcy. At the urging of creditors, the company has apparently changed its tune. Three other potential partners - JetBlue Airways Corp. (NASDAQ: JBLU), Alaska Air Group Inc. (NYSE: ALK) and Virgin America - have all found American's merger solicitations uncompelling, choosing instead to remain independent.

The tie-up that created United Continental Holdings Inc. (NYSE: UAL) and the merger of Delta and Northwest into a larger Delta Air Lines Co. (NYSE: DAL) has practically made it mandatory for the country's large carriers to get even bigger. American's reluctance - or inability - to find a partner contributed to its bankruptcy filing.

US Airways stock is up 5.4% in the first few minutes of trading this morning at $10.96 in a 52-week range of $3.96 to $14.51.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Airlines, Bankruptcy, Mergers & Acquisitions Tagged: ALK, DAL, featured, JBLU, LCC, UAL