American, US Airways Deal Takes Off

by , Feb 14, 2013, 7:52 AM
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American Airlines and US Airways will announce the details of their merger this morning after more than a year of to and fro, creating the world’s largest carrier with the muscle mass to compete more effectively with United and Delta, who have themselves bulked up in recent years. The boards of both airlines approved the deal yesterday, according to a release issued early this morning on the US Airways website. 

“A merger would bolster American’s domestic footprint, strengthen its presence in the Northeast and give it a bigger network to attract business travelers and corporate accounts,” Jad Mouawad writes in the New York Times.

You can register to participate in a live webcast of an investor/analyst conference call discussing the merger, which will start at 8:30 a.m. ET, here.

The deal still has to be cleared by US Airways shareholders, a bankruptcy judge in New York -- American filed for Chapter 11 protection 442 days ago –- and the antitrust division of the Justice Dept., but observers do not anticipate major snarls in the transaction.

The combined entity will “retain the iconic American brand name,” with its new, somewhat controversial, logo and be based in Fort Worth, Texas, but the merger is seen as a victory for US Airways’ chairman and CEO W. Douglas Parker, who will be the new CEO. American’s chairman and CEO Thomas W. Horton will be chairman, “though his tenure could be limited,” Mouawad points out

“Parker doggedly pushed for the tie-up for more than a year over the resistance of ... Horton, his old friend and rival, and ultimately won over AMR's disparate creditors with his vision for a merger that would build a stronger carrier and offer stakeholders more value than American's plan to leave Chapter 11 independently,” Susan Carey and Mike Spector write in the Wall Street Journal.

Tracing the flight path of the deal, they say that Horton warmed up to combining with US Airways the over the summer. Discussions got serious in September, and US Airways made a second offer in November whereby “American creditors own 70% of the combination and US Airways shareholder 30%.”

"My entire career has prepared me for this moment," Parker is said to have told American’s creditors committee.

Parker says in the press release that the combined company “will maintain a significant corporate, operational and hub presence in Phoenix,” and points to newAmericanarriving.com for ongoing information about the merger.

The Dallas Morning News’ extensive coverage of the deal includes graphics illustrating the combined assets of the two entities, a comparison to its major competitors (Delta, United and Southwest) and a look at its market share presence at each of its hub airports.

Reuters’ Soyoung Kim reports that US Airways president Scott Kirby “decided early in the process that they would only proceed if they had the support of American employees,” which, a source says, “was a lesson learned from Delta. If we don't have them, it won't happen. And they led the way.”

US Airways made a hostile bid for the then-bankrupt Delta in 2007 that failed for lack of support on many fronts, as Aaron Karp reported on Air Transport World last year. But American’s three largest unions announced in April 2012 that they would “support a potential takeover bid by US Airways,” as Andrea Ahles reported in the [Fort Worth] Star-Telegram.

Presumably, you can look forward to some beaming flight attendants today. 

The consolidation, however, “will put 86% of domestic air travel in the hands of four big airlines,” Ashley Halsey III reports in the Washington Post.

NBC News contributor A. Pawlowski has compiled five other “things … the merger means for you,” the traveler. Yes, higher fares. But not right away. Anticipate “computer glitches, reservation snafus and system hiccups when the two airlines begin to integrate their operations.” There will also be “an overabundance of elite-status members,” so upgrades will be more difficult to obtain initially. 

But the bottom line, FareCompare.com CEO Rick Seaney tells Pawlowski, is that “with financial stability airlines can improve their woefully neglected product. Consumers will be much more likely to board their next flight on a plane built this century and in many cases even this decade.”

Hmmm.

1 comment on "American, US Airways Deal Takes Off".

  1. Paula Lynn from Who Else Unlimited
    commented on: February 14, 2013 at 11:45 a.m.
    Maybe finally we won't be hearing the thank you for choosing ____airline. What choices do we have anymore ? What recourses for problems ?

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