US Airways has signed American Airlines Non-Disclosure Agreement and plans to engage in reviewing sensitive American Airlines information with AA in order to make a better determination if a merger can be done and, if so, how it should be done.

Expect both airlines to go pretty radio silent on this issue for many weeks now.  It takes time to review data and it takes time to do an analysis on that data.  US Airways has until December, more or less, to formulate a plan and have it ready for presentation.

If we hear of anything from AA about this process, especially from Tom Horton, expect this to become a much more ugly fight.

AA goes into this with the public thinking that it is already improving its situation with respect to reported profits for the past 2 months.  Those reported profits aren’t “real”.  Bankruptcy has allowed AA to stop paying many creditors and to reduce payments to others.  Its operating costs are artificially low presently and combine that with the summer season and you get what appears to be “profit”.  It’s a nice publicity announcement and can certainly go a long way towards confusing public perception but analysts know better.

Also of interest is the fact that AA has revealed it has signed NDAs with other parties as well.  These may not be airlines and, in fact, they may be investment companies interested in participating in a stand-alone exit where the equity they would hold is quite likely to see a considerable gain in the first year.

Filed under: Airline News by ajax