Two years ago I called American a bankruptcy waiting to happen.

Their costs were too high. Sure, their revenue was too low also and bankruptcy wasn’t necessarily going to solve that. But their major competitors had been through the bankruptcy court cost-cutting exercise. Staying out of Chapter 11 was both noble and a preservation strategy for existing management. (The day American did file Chapter 11 their CEO resigned…)

When American filed for bankruptcy I said that AAdvantage miles were safe. And that a bankruptcy could even be good for American’s frequent flyers at least in the short term, as the airline could use the mileage program to drum up revenue and traffic, awarding bonus miles, all the while not wanting to rock the boat with its customers through any sort of devaluation. In the long-run, it’s been quite awhile since American has revisited its award chart, on a calendar basis its somewhat due, though I don’t expect wholesale changes in the near-term.

The real question about the future of American (and of course, about American miles!) is what the airline looks like going forward. I think it has a pretty solid future as an independent entity, provided it can straighten out its costs in bankruptcy. Revenue is still too low but get the costs under control and you have time to figure out the revenue picture. American has been killing routes, shedding some staff, and investing in product. Whether that succeeds or fails is ultimately an empirical question, I don’t think the strategy is revolutionary, but I do think they can stand on their own.

On the other hand, they could be acquired. United and Continental have just done their deal, there’s no suitor in United. They’re also already the biggest airline, swallowing up the number three won’t pass government muster. Delta has ‘done their deal’ with Northwest but at least is smaller than United, their deal was a few years ago, and there’s less overlap with American than between American and United (except in New York, where United is also strong). I’d hate a Delta merger the most, there hasn’t been a ton of speculation on that.

The one everyone expects is US Airways. Because US Airways clearly wants American. Badly. So they’ve made plenty of overtures to labor, and to the press. Two months ago there was a frenzy of speculation that a deal was imminent and I said that it wasn’t.

I don’t think that an American Airlines-US Airways merger makes sense, by which I largely mean that I don’t think it makes sense for US Airways shareholders or for American’s creditors. The best argument anyone has made is that — despite fleet inefficiencies, overlapping rather than complimentary hubs, likely labor strife, huge transition costs, and that mergers rarely ever produce the benefits promised — US Airways has smart managers and would do a better job with American’s assets than American’s managers would.

Even that is an argument possibly that a deal should appeal to American’s unsecured creditors, if they get promised more than an American-led restructuring would offer them. It doesn’t really argue that US Airways shareholders are better off, that much depends on the cost of the deal and the costs to integrate American.

Ultimately I believe that the leadership of US Airways just wants to run a bigger airline. Doug Parker took America West and bought US Airways (which itself had 2 bankruptcies in the previous decade). He tried to buy United, more than once, the story supposedly the first time Is that a deal wasn’t done because he wasn’t going to become head of the combined airline. He tried to buy Delta. And now American is the next biggest prize.

I did start wondering whether a deal might be closer in the offing when American’s alliance and joint venture partner British Airways’ parent issued a statement that was about as positive about a US Airways merger as they could possibly be.

“Such a merger would not be detrimental to oneworld. In terms of the joint business agreement any consolidation that increases the choices for our customers would be welcomed,” International Airlines Group said in an emailed statement to Reuters, when asked about a potential tie-up of AMR and US Airways.

Reader Alan H. sent me to the latest salvo with US Airways saying they could seek DOJ anti-trust clearance in advance of a deal. And the piece has five sources confirming it, this isn’t one person slipping a story in the dead of night, this is an orchestrated leak. A campaign even. Even still it’s hedged saying “the exact timing of a filing with antitrust regulators depends in large part on the status of AMR’s ongoing contract disputes with its three primary labor unions, and the timeframe could slip beyond July.”

Of course the contract disputes with labor unions are the crux of the very bankruptcy, the biggest costs American wanted to get under control, what they’re having the toughest time with, and what US Airways has even impeded by trying to do side deals with the unions to get the creditors committee in the bankruptcy case to support a merger.

In other words, there’s nothing in this ‘leak’ other than an attempt to generate news and momentum behind a possible deal.

It could be well-timed momentum, though, because American is pulling the plug on its new passenger service system under development with HP (hat tip to the TravelingBetter forum). The reasons for doing so are good business. It makes no sense to develop a custom product from scratch when off the shelf products do 90% or more of what you want. Certainly not on this scale. Good decision.

But HP is on the creditors committee. They were pretty strongly in the corner of current management since that was the path towards millions in future development fees. American was strategic in approving a breakup payment through the courts rather than seeking to terminate the contracts without that payment. An unsecured creditor would simply want the best payback possibility and they might view that as a US Airways deal. Now they’ll judge their prospects based on ongoing business with American, albeit with lower fees, compared to likely having no business with US Airways. Still, I wonder if undermining the support of a key creditor – in furtherance of a key business objective – could undermine the quest to stay independent.

There’s certainly blood in the water. As a frequent flyer I want American to stay independent, though I’d view the value of my reasonable chunk of US Airways miles to go up in the event of a merger. The combined entity would presumably be a member of oneworld, which currently offers the best international first class award availability. Though I don’t trust the long-term value proposition for customers offered by current US Airways management. I’m holding my breath a bit these days.