US Airways and American Tie The Knot

American Debuts New Livery

American debuts new livery – Courtesy PRNewsFoto/American Airlines.

US Airways and American Merge

February 14, 2013 – (Louisville, KY): In a wedding only appropriate for Valentine’s Day, US Airways and American Airlines announced their merger. The board of directors of each company approved a definitive merger creating a new global carrier, keeping the name American Airlines.

AMR Corporation based out of Dallas-Fort/Worth, Texas, will be the surviving company from the merger. The new company will also have additional corporate offices in Phoenix.

The merged carrier will keep the American Airlines name, as well as membership in the oneworld Alliance, to form a robust global network. Combined, the new American Airlines will sport over 101 billion frequent flyer members and offer 6,700 daily flights to 336 destinations in 56 countries.

Tom Horton, Chairman, President, and CEO of American Airlines, along with Doug Parker, Chairman and CEO of US Airways, held a conference this morning in Dallas-Fort/Worth to discuss the upcoming merger of the two companies. In an interesting twist, the pending merger of the two companies brings Doug Parker back to American Airlines where he started his career with Tom Horton.

What does the US Airways – American Merger mean for consumers

While the route network of each airline does not have a lot of overlap, the two carriers will no longer have the ability to compete against each other. This could result in higher fares in some markets. At the same time, the merged carrier may be in a better position to compete against other carriers on routes that’ll be new to the carrier.

The carrier has said all hubs will be kept, but there’s a good likelihood that some hub re-balancing will occur, especially in the southwest.

In the 3rd quarter when the merger starts, it is likely the two carriers will engage in codeshare agreements as the process of merging the aircraft fleets begin.

At the same time, depending on how the frequent-flyer accounts are merged, it may be possible to redeem awards with both Star Alliance via US Airways and oneworld via American for a limited time. In the end, the accounts will be combined and all miles will become American miles.

While we’re not sure what the American Airlines frequent-flyer program will look like after the merger, we expect it’ll be a combination of both the US Airways and American Airlines plan.

American Airlines is also undergoing an ambitious fleet renewal program. American expects to continue delivery of new aircraft as scheduled while the relief granted in bankruptcy will allow the airline flexibility in returning older aircraft to lessors. This will allow American to operate newer, fuel-efficient aircraft and to place the right sized planes in the right markets while having great flexibility to match supply and demand.

Needless to say there will be some turbulence as the different work groups and information technology platforms are brought together. This has been the experience with both the Delta-Northwest and United-Continental mergers.

More about the merger

The merger is expected to become effective in the 3rd quarter of 2013 when the deal closes, pending regulatory approval, approval by US Airways shareholders, and anti-trust approval. Until the merger closes, it’ll be business as usual at each carrier.

US Airways stockholders will receive one share of common stock of the combined airline for each share of US Airways common stock then held. The all stock merger will be made up of 72% of AMR and 28% of US Airways.

The Board of Directors will initially be made up of twelve members. The Board will be comprised of three American Airlines representatives, including Tom Horton, four US Airways representatives, including Doug Parker, and five AMR creditor representatives.

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