March 28, 2015

American, US Airways announce $11 billion merger

Published 12:00 am Thursday, February 14, 2013

DALLAS — American Airlines and US Airways have agreed to merge in an $11 billion deal that would create the world’s biggest airline.
The combined carrier will be called American Airlines and be based in Fort Worth, but US Airways CEO Doug Parker will run it.
The merger would reduce the number of major U.S. airlines to four: the new American, United, Delta and Southwest.
The deal is a coup for smaller US Airways Group Inc., which pushed for a merger almost as soon as American parent AMR Corp. filed for bankruptcy protection in November 2011.
While Parker runs the company, AMR CEO Tom Horton will serve as chairman until its first shareholder meeting, likely in mid-2014.
The boards of both companies approved the deal Wednesday. The companies announced it early Thursday and expect it to close in the third quarter of this year.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” Parker said in a statement. “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 go.”
AMR creditors will own 72 percent of the new company, with the remaining 28 percent will going to US Airways shareholders. The creditors’ portion includes a 23.6 percent share for American employees and unions, plus a small stake for existing shareholders of American’s parent AMR Corp.
The airlines said they expect $1 billion in combined benefits from the merger. They expect the bigger airline to lure corporate travelers away from competitors, contributing to $900 million in additional revenue. They also anticipate cost savings of roughly $150 million.
They also said they expect to spend $1.2 billion on transition costs over the next three years.
Travelers on American and US Airways won’t notice immediate changes. It likely will be months before the frequent-flier programs are combined and years before the two airlines are fully integrated.
The companies had negotiated since August, when creditors pushed AMR to conduct merger talks so they could decide which earned them a better return: a merger or an independent American.
The deal would need approval by AMR’s bankruptcy judge and antitrust regulators, who have permitted three other big airline mergers to go ahead since 2008.
The rapid consolidation has allowed the surviving airlines to offer bigger route networks that appeal to high-paying business travelers. And it has allowed them to limit the supply of seats, which helps prop up fares and airline profits.
The new American would have more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates. It will be slightly bigger than United Airlines by passenger traffic, not counting regional affiliate airlines.
The new airline will keep all of American’s and US Airways’ hubs.
The companies said the new board of directors will have 12 members: Three from American, including Horton; four from US Airways, including Parker; and five appointed by American’s creditors.
AMR shareholders are poised to get a 3.5 percent stake in the new airline, the companies said. That’s unusual because equity holders typically get wiped out in a Chapter 11 proceeding.
The companies said it’s too soon to know where the new airline’s operations center, reservations, flight training, maintenance and crew bases will be.
Shares of US Airways rose 17 cents, or 1.2 percent, to $14.66 in premarket trading.

Comments

comments

Crime

Casey Parsons sentenced to 10 years, Sandy given 8 in federal prison

News

Political notebook: Warren talks tax changes, historic credit during town hall meeting

East Spencer

Fire destroys abandoned house

Education

National Superintendent of the Year addresses veteran teachers

News

Posters March 28

Crime

Blotter: Police serve warrant, arrest another man on drug charges

News

Catawba history professor says liberal institutions near end

Local

The cookie (record) crumbles: Judd, Walker each sell 3,500 boxes

Landis

Landis to hold planning retreat Saturday

Crime

Man responsible for car break-ins arrested in Mooresville

Business

Chamber of Commerce qualifies for national award

Crime

Casey Parsons gets 10 years, Sandy, 8; judge says Erica Parsons no longer exists

Crime

Teen, juvenile charged in Mooresville drug sting

Entertainment

After 50 years, Dan Truhitte still hears ‘The Sound of Music’

News

Warren to have town hall meeting in Salisbury

News

Senate’s sales tax bill would hurt Rowan’s cities and towns

China Grove

Enochville Fire Department gets 34-foot water tank delivery

Local

Rowan’s population up a few hundred in census estimates

Crime

Crime blotter: Police investigating arson at Piedmont Correction

Education

Bestselling author Kimberla Lawson Roby to speak at Livingstone Women in History event today

News

Kitchen fire damages home

Local

Free haircuts for veterans April 20 at Made Man

Local

Posters March 27

Local

Nominations being accepted for preservation awards