American Airlines 2012 Annual Report Download - page 12

ITEM 1A. RISK FACTORS
These risk factors are generally applicable to American and its parent AMR, unless the context indicates otherwise.
Our ability to become profitable and our ability to continue to fund our obligations on an ongoing basis will depend on a number of risk factors, many of
which are largely beyond our control.
Risk Factors Relating to the Merger
On February 13, 2013, AMR and US Airways Group, Inc. (US Airways) entered into the Merger Agreement, as more fully described under "Merger
Agreement” in Note 17 to the consolidated financial statements.
The Merger is subject to a number of conditions to the obligations of both us and US Airways that may not be fulfilled, which could cause the
termination of the Merger Agreement.
The Merger Agreement contains a number of customary conditions to consummation of the Merger, such as the accuracy of representations and warranties in
all material respects, the fulfillment of obligations set out in covenants, that certain consents and regulatory approvals have been obtained, that there are no
legal prohibitions against consummation of the Merger, that approval of the US Airways stockholders has been received, that an order from the Bankruptcy
Court confirming our plan of reorganization is in effect, that the plan of reorganization conform with the requirements of the Merger Agreement, that secured
indebtedness of the Debtors and certain other claims against the Debtors not exceed specified levels and other customary conditions. US Airways has the right
to unilaterally terminate the Merger Agreement under certain conditions. Many of the conditions to consummation of the Merger are not within our control, and
we cannot predict when or if these conditions will be satisfied. If any of these conditions are not fulfilled or waived prior to the termination date set forth in the
Merger Agreement (October 14, 2013, as it may be extended), it is possible that the Merger will not be consummated. A failure to consummate the Merger in
accordance with the Merger Agreement would result in our Chapter 11 Cases continuing. If the Merger does not occur, AMR could then seek to emerge from the
Chapter 11 Cases as an independent company or could seek another consolidation partner or another strategic alternative transaction. In any event, the failure
of AMR to merge with US Airways would result in a delay, which could be substantial, in AMR and its debtor subsidiaries' ability to file an alternative plan
of reorganization and successfully emerge from our Chapter 11 Cases. During such a delay, it is possible that third parties could propose their own plans of
reorganization if we and our debtor subsidiaries do not have the exclusive right to propose a plan of reorganization. We could believe that such a third party
plan is not in the best interests of our creditors or other constituencies. Such a delay could also create uncertainty with our customers, financing parties,
vendors, employees and the communities we serve, and result in our Chapter 11 Cases continuing for an extended period of time, which could result in
disruptions in employee stability and declining financial and operational performance.
The Merger is subject to the receipt of consents and clearances from certain domestic and foreign regulatory authorities that may impose
conditions that could have a material and adverse effect on AMR as the surviving parent, or that could delay or, if not obtained, prevent the
completion of the Merger.
Before the Merger can be completed, applicable waiting periods must expire or terminate under antitrust laws and various approvals, consents or clearances
must be obtained from certain domestic and foreign regulatory entities, including those regulating the provision of commercial aviation services. In deciding
whether to grant antitrust or regulatory clearances, the relevant antitrust authorities will consider the effect of the Merger on competition within their relevant
jurisdictions. The terms and conditions of approvals that are granted may impose requirements, limitations, costs or restrictions on the conduct of the
surviving parent's business following the Merger. There can be no assurance that regulators will not impose terms, conditions, requirements, limitations, costs
or restrictions that would delay completion of the Merger, impose additional material costs on or limit the revenues of us or the surviving parent, or limit some
or all of the synergies and other benefits we anticipate following the Merger. In addition, we cannot provide assurance that any such terms, conditions,
requirements, limitations, costs or restrictions will not result in a material delay in, or the abandonment of, the Merger.
The Merger is subject to the receipt of numerous approvals, including approvals from US Airways' stockholders and confirmation of our plan of
reorganization by the Bankruptcy Court. Failure to obtain any of these approvals would prevent the completion of the Merger.
The Merger Agreement will not be binding on either AMR or US Airways until the Bankruptcy Court enters an order approving its enforceability. In addition,
before the Merger can be completed, US Airways must submit the Merger to a vote of its stockholders, US Airways' stockholders must have approved the
Merger, the approval of the plan of reorganization contemplating the Merger by the requisite percentage of each class of claimholder (as determined pursuant to
the Bankruptcy Code) must be obtained, and the Bankruptcy Court must enter an order confirming the plan of reorganization and consummation of the
Merger. There can be no assurance that any of these approvals will occur. Failure to obtain these required approvals within the expected time frame, or
12