American Airlines and US Airways announced that say they’re merging in a deal they value at $11 billion, creating the world’s biggest airline.
The combined carrier will be called as American Airlines , and it will be run by US Airways CEO Doug Parker. American’s CEO, Tom Horton, will serve as chairman of the new company until mid-2014.
The companies said merging would create savings of more than $1 billion a year. The merger will be part of American Parent AMR’s plan for exiting bankruptcy protection which was filed in November 2011.
It reduces the number of major U.S. airlines to four. The combined U.S. Airways-American Airlines joins United Continental, Delta Air Lines and Southwest Airlines as the industry’s dominant players in the U.S.
The deal still needs the approval of the bankruptcy court and federal regulators, a process that will take months to complete.
Most experts don’t expect this deal to trigger a surge in ticket prices.
Customers can continue to book travel and track and manage flights and frequent flyer activity through AA.com or USAirways.com, and will continue to enjoy all benefits and rewards of the AAdvantage and Dividend Miles frequent flyer programs. At this time, there are no changes to the frequent flyer programs of either airline as a result of the merger agreement. All miles in both programs will continue to be honored. Upon merger approval, additional information will be provided to customers of both frequent flyer programs on any future program updates, including account consolidation or benefit alignment.
Doug Parker, Chairman and Chief Executive Officer of US Airways, said, “Today marks an exciting new chapter for American Airlines and US Airways. American Airlines is one of the world’s most iconic brands. 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.”
Parker continued, “Today’s announcement is possible only because of the important work carried out over the past year by Tom Horton and the American team. No one cares more about the long-term success of American Airlines and its people than Tom. Through a successful restructuring and this merger, Tom and the American team have established an excellent foundation for the new American Airlines to become a premier global airline. I am grateful for all that Tom has done to ensure that American is in the best position possible for future success and am delighted he has agreed to remain on board to assist with the transition.
“I am particularly pleased for the employees of both US Airways and American. This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees. We are grateful to have the support of both companies’ unions and thank them and their leaders for their hard work and vision. We look forward to a bright future for our employees and enhanced service and choice for our customers. With today’s announcement, we start becoming one team and one new airline.”
The combined airline is expected to:
- Provide the most service across the East Coast and Central regions of the U.S., including the East Coast shuttle, enhancing the combined carrier’s competitive position
- Expand its presence and further strengthen the network in the Western U.S.
- Bolster American’s industry-leading position in Latin America and the Caribbean
- Enhance connectivity within the oneworld Alliance – including joint businesses with British Airways and Iberia across the Atlantic and with Japan Airlines and Qantas across the Pacific – creating more options for travel and benefits both domestically and internationally
- Serve 21 destinations in Europe and the Middle East
- Maintain current hubs of both American Airlines and US Airways, resulting in more choices for customers
- Improve traffic flows through the existing hubs of both carriers
- Expand service from those hubs to offer increased service to existing markets and service to new cities
- Provide an industry-leading travel experience through innovative initiatives intended to increase comfort and connectivity for all customers
- Improve valuable loyalty program benefits through expanded opportunities to earn and redeem miles across the combined network
