American Airlines board to study merger option

Directors of American Airlines' parent company likely won't make a decision when they meet Wednesday to consider a possible merger with US Airways, even as momentum for a deal is building.

Investors have been bidding up US Airways' stock price, and leaders of the two pilot unions agree on how to combine contracts, two developments that analysts say strengthen the case for a tie-up.

Still there could be a way to go. American parent AMR Corp., which filed for bankruptcy protection in November 2011, and US Airways Group Inc. have been talking about a potential merger since late summer but have not agreed on price, each side's ownership share, and who would run the company, according to people familiar with the situation. They spoke on condition of anonymity because the talks are confidential.

AMR CEO Thomas Horton raised expectations of a speedy outcome when he told employees last week that the company would decide ``within a matter of weeks'' whether it would be better to merge with smaller US Airways or remain independent.

That fueled speculation that AMR's board would make a decision this week. Bruce Hicks, an AMR spokesman, tamped down the rumors Monday, saying, ``I am not expecting any news regarding the review of strategic alternatives this week.''

There is no guarantee that American and US Airways will ever reach a friendly deal to create a single airline roughly the same size as United Airlines, currently the biggest, and larger than No. 2 Delta.

Robert W. Mann, an aviation consultant who once worked at American, believes that AMR will try to ``run the clock'' _ avoid announcing a merger decision for as long as possible because rejecting US Airways' overtures could trigger an immediate hostile takeover bid. If the economy and the airline industry grow stronger, a delay gives AMR more time to post better financial results and boost Horton's argument that he's already fixing the company, Mann says.

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