15-Feb-2013 9:14 AM

American Airlines and US Airways confirm merger

American Airlines and US Airways officially announced (14-Feb-2013) both carriers have agreed to merge following a unanimous decision by AMR Corp and US Airways Group shareholders. The combined carrier will maintain American Airlines’ branding with a combined equity value of approximately USD11 billion based on the price of US Airways’ stock as of 13-Feb-2013. By 2015, the combined carrier expects annual synergies of more than USD1 billion. American Airlines’ current CEO Tom Horton will be chairman while US Airways’ current CEO Doug Parker will serve as CEO and a member of the board of directors of the combined carrier. The merger is conditional on the approval by the US Bankruptcy Court for the Southern District of New York, regulatory approvals, approval by US Airways shareholders, other customary closing conditions, and confirmation and consummation of the Plan. The combination is expected to be completed in 3Q2013.

  • Management: Doug Parker will serve as CEO and Tom Horton as chairman of the combined carrier. The board of directors will comprise 12 members initially comprising three American Airlines representatives including Tom Horton, five US Airways representatives including Doug Parker and five AMR creditor representatives;
  • Ownership: AMR shareholders will own 72% while US Airways shareholders own 28% of the combined company stock. US Airways shareholders will receive one share of common stock of the combined carrier for each US Airways common stock share. American Airlines’ diluted equity ownership of the combined airline will be issuable to stakeholders of AMR and its debtor subsidiaries that filed for relief under Chapter 11 including American’s labour unions, and current AMR employees. As part of the merger agreement, AMR entered support agreement with certain unsecured creditors holding approximately USD1.2 billion of prepetition unsecured claims against the debtors;
  • Hub and Network: The combined company will be headquartered at Dallas/Ft Worth with a significant corporate and operational presence in Phoenix. The combined carrier will have over 6700 daily flights to 336 destinations in 56 countries and expects to maintain all hubs and service to all destinations. Network enhancements include strengthening American Airlines’ current US-Latin American dominance and enhancing US Airways US east and west coast operations.
  • Fleet and Inflight product: The combined carrier will maintain current orders for 600 mainline aircraft from Boeing and Airbus including 517 narrowbody and 90 widebody aircraft. The combined fleet will feature IFE and inflight Wi-Fi connectivity and a ‘Main Cabin Extra’ product offering 4-6inches of additional legroom in the main cabin. American Airlines’ 777-200ERs and 767-300s will be retrofitted with lie-flat premium seating similar to US Airways' A330 cabin.
  • Alliance, FFP and branding: The combined carrier will keep American Airlines’ oneworld alliance with US Airways leaving Star Alliance. AA/US will keep American Airlines’ branding following a recent brand overhaul. AA.com and USAirways.com will continue to operate separately as will FFP programmes AAdvantage and Dividend Miles;
  • Employees and Unions: The combined carrier expects to provide a path of improved compensation, opportunities and benefits for employees. Employees can expect reciprocal travel privileges as quickly as possible. American Airlines and US Airways labour groups represented by their respected unions have previously agreed to terms for improved collective bargaining agreements effective upon the closing of the merger;
  • Regional subsidiaries: The combined carrier expects its regional subsidiaries, American Eagle, PSA and Piedmont Airlines will operate as separate entities.
  • American Airlines CEO Tom Horton said, “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. 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.”
  • US Airways CEO Doug Parker said, “Together we will combine the proud histories of both airlines and create one team that recognises the contributions of all employees to our airlines’ great customer service and financial success. Our future has never looked brighter thanks to the outstanding people of both American Airlines and US Airways.” [more - original PR - AA

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