Midday Commentary: Airline bonds little moved on news DOJ could settle dispute with AMR, US Airways

By Paul Deckelman

New York, Aug. 29 - Holders of AMR Corp. and US Airways Group Inc. bonds reacted warily early Thursday to the late-Wednesday news that the Justice Department and the airline companies would be open to settling their legal dispute over whether the two companies should be allowed to merge.

At 10:45 a.m. ET, AMR's 6¼% notes due 2014 were seen actually off slightly, at 99½ bid, versus Wednesday's close at 1001/4. Volume was over $2 million.

US Airways' 6 1/8% notes due 2018 were seen up 1½ points at 92¾ bid but only on a handful of smallish odd-lot trades.

Shareholders of the two companies seemed a little more enthusiastic at the prospect. Fort Worth-based AMR's over-the-counter traded shares were up 14 cents, or 4.59%, at $3.19 on volume of 6.3 million shares, already two-thirds of the usual daily turnover.

Tempe, Ariz.-based US Airways' Nasdaq-traded shares gained 65 cents, or 4.25%, to move up to $15.99, on volume of 2.9 million, a little less than half the usual full-day norm.

In a document filed jointly by the Justice Department and the two companies with the federal district court in Washington, the government said it was "open to a settlement that addresses the anticompetitive harms posed by the merger but have not yet received any such proposal from the defendants."

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