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A trustee representing equipment noteholders who are owed $1.2 billion is suing AMR Corp. to block the American Airlines parent from refinancing the notes without covering certain early-repayment fees, Dow Jones Newswires reported yesterday. The lawsuit filed Friday joins a similar adversarial suit filed in early November by the representative of $174.2 million in secured notes. AMR is trying to refinance a total of $1.3 billion in equipment notes and to avoid this fee on all of those notes. U.S. Bank National Trust Association, in a complaint filed as part of AMR's chapter 11 case, said that AMR's request to refinance the notes with $1.5 billion in new financing is purely to take advantage of the favorable credit market. The refinancing has nothing to do with AMR's bankruptcy filing, it said, and the company's attempt to avoid paying certain obligations to noteholders violates the terms of the indenture agreement.

The pilot union at AMR Corp., parent of American Airlines, said that it will vote on a tentative contract with the bankrupt airline by early December, Reuters reported on Friday. The board of Allied Pilots Association on Friday approved the agreement-in-principle reached last week as a tentative agreement, which will now be subject to votes by its members, according to a statement on the union's website. The voting will be completed by Dec. 7 and the results are expected to be announced the same day, the company said. AMR, which is trying to reduce costs and emerge from bankruptcy, has already reached collective bargaining agreements with unions representing its flight attendants and ground workers.

Bankruptcy Judge Robert E. Gerber ruling will be revealed today on whether to let Pinnacle Airlines Corp. slash its pilots’ pay, the Wall Street Journal reported on Saturday. Judge Gerber filed his ruling under seal on Thursday in court. Gerber has gave the stakeholders until the close of business on Friday to proof the document, looking for “any typographical or citation errors,” “technical inaccuracies” or slips that disclose confidential information. Pinnacle sought Judge Gerber’s permission to shave an average of $59.6 million a year in costs related to the pilot union contracts between 2013 and 2018, contending that is necessary for its survival. Earlier this year, that number was $32.2 million, but Pinnacle says that it got a message from Delta that meant bigger cuts are called for.

Professional fees and expenses have topped $200 million in the bankruptcy case of American Airlines Inc., parent AMR Corp. and various affiliates, the Dallas Morning News reported yesterday. Through Tuesday’s filings in the case, the law firms, financial advisers and other professionals involved in the airline reorganization have billed $191.4 million in fees and $9.2 million for expenses for a total of $200.6 million. AMR, American and the other companies filed chapter 11 petitions on Nov. 29, 2011.

AMR Corp. Chief Executive Tom Horton yesterday told creditors that a merger with rival US Airways Group Inc. would need to result in creditors receiving the lion's share of equity in a combined airline for a deal to proceed, the Wall Street Journalreported today. His remarks indicate the two companies are moving closer to a possible agreement on a merger, even as AMR pursues its own plan from emerging from bankruptcy proceedings as an independent airline. Horton made the comments as part of an update on merger discussions during a gathering of the airline's official creditors committee. While not spending too much time on specific figures, Horton made it clear that American, the No. 3 U.S. airline by traffic, expects its creditors to receive more than 70 percent of the shares of a combined airline.

Bankrupt AMR Corp., parent of American Airlines, has agreed with its pilots' union on language for a new labor deal to be voted on by union members, Reuters reported on Friday. AMR has been in talks with the Allied Pilots Association (APA) as it tries to reduce labor costs and emerge from bankruptcy. The APA's board on Friday presented a "counter-proposal" to offers from AMR management, which the company accepted. The contract must be ratified by the union's roughly 7,500 pilots, who rejected a previous labor proposal in August. AMR has already reached new collective bargaining agreements with unions representing its flight attendants and ground workers.

AMR Corp.'s American Airlines was sued by a noteholder trustee that says American is required to make a payment owed to investors under the airline's plan to borrow $1.5 billion and repay debt, Bloomberg News reported yesterday. U.S. Bancorp, the trustee for $174.2 million of 13 percent secured notes due in 2016, wants a court order that American is required to pay a make-whole amount under the refinancing plan, according to court documents filed yesterday. AMR, based in Fort Worth, Texas, said in October that it is seeking court permission to borrow $1.5 billion backed by aircraft and redeem existing debt to take advantage of lower interest rates.
http://www.bloomberg.com/news/print/2012-11-08/american-airlines-sued-b…

In related news, hedge fund Marathon Asset Management has withdrawn a request for an independent investigator to examine the books of American Airlines, a unit of bankrupt AMR Corp, lawyers for the companies said at a hearing yesterday, Reuters reported. The move came after AMR agreed to preserve potential clawback claims relating to debt deals, struck between Marathon and AMR, that left American Airlines with $2.26 billion of debt. AMR entered bankruptcy last November, and is considering its options for emerging either as a standalone firm or to merge with smaller competitor US Airways Group, which is making an aggressive takeover push.
http://www.reuters.com/article/2012/11/08/amr-bankruptcy-idUSL1E8M7P9V2…

A negotiating committee representing American Airlines pilots union said yesterday that it is close to finalizing contract language for a labor deal with airlines management, Reuters reported. It expects to present a final product to the union board later this week. The board would then review the contract, and if approved, would send it to union members for a ratification vote. Remaining points of the contract which have not yet been agreed upon include language around pay, furlough protection and outsourcing work to pilots who are not represented by the American Airlines union, the group said.

AMR Corp.'s American Airlines settled litigation with Sabre Holdings Inc., the flight data and reservation business that American spun off in 2000 and later accused of trying to crush competition from its former parent, Bloomberg News reported yesterday. The companies renewed their current distribution agreement for multiple years, according to a jointly issued statement today. The airline will also receive an unspecified sum of money from Sabre. The settlement comes one week into the Fort Worth, Texas, state court jury trial of a lawsuit in which American claimed Sabre units doubled fees for displaying the airline’s data on its system, suppressed that data and organized a boycott to punish the carrier for trying to develop a new data and reservation system. The agreement also resolves federal claims between the companies.

The pilots union at American Airlines said yesterday that a labor deal could be close if the bankrupt airline is willing to make certain key concessions, Reuters reported yesterday. The Allied Pilots Association union, locked in years of tense contract negotiations with the AMR Corp. unit, said that it wants a contract on par with other major carriers, namely Delta Air Lines, on issues such as pay. AMR declared bankruptcy last November, in part to reduce labor costs. While it has reached new contracts with its flight attendants' and ground workers' unions, it remains in negotiations with the pilot group.