American, US Airways agree to merge
By Todd DeFeo
The boards of US Airways and American Airlines on Thursday announced their decision to merge, a move that is expected to create the world’s largest airline.
A federal bankruptcy judge in New York must still approve the merger. The new airline, to be based in Fort Worth, Texas, will continue under the American name.
AMR Corp., which owns American and American Eagle, filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York in November 2011. American and US Airways have talked for months about a merger and previously reached an agreement with major employee unions, setting the stage for Thursday’s announcement.
Doug Parker, chairman and chief executive of Tempe, Ariz. -based US Airways, will serve as the new American’s CEO. Thomas W. Horton, the current chairman and CEO of American, will serve as American’s chairman of the combined airline’s board of directors through its first annual meeting of shareholders; he will also serve as the combined airline’s representative to the oneworld Alliance.
“Today, we are proud to launch the new American Airlines – a premier global carrier well equipped to compete and win against the best in the world,” Horton said in a statement. “Together, we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners, and the many communities we serve.
“The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available,” Horton added. “The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability.”
According to CNN Money, U.S. Airways, the nation’s fifth largest airline, and American, the nation’s fourth largest, in 2012 carried roughly 24 percent of fliers on domestic carriers. Delta Air Lines carried 22 percent while United Continental accounted for 19 percent of air passengers and Southwest Airlines had 18 percent.
The merger is expected to allow the new American to better compete against larger rivals, including Atlanta-based Delta Air Lines. While the merger should lead to the world’s largest airline, most media reports indicate federal regulators aren’t likely to stand in the way of the merger as the two airlines have relatively few overlapping routes.
“Today marks an exciting new chapter for American Airlines and US Airways. American Airlines is one of the world’s most iconic brands,” Parker said in a statement. “The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace. Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to travel, when they want to go.”
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