News Column

American Airlines, US Airways Complete Merger

December 9, 2013

Greg Karp, Chicago Tribune

american airlines
American Airlines and US Airways officially announced their merger Monday (file photo)

Dec. 09--American Airlines parent AMR Corp. and US Airways Group Inc. officially announced their merger Monday, creating the world's largest airline and likely marking the end to a wave of major-carrier consolidation that has helped put U.S. airlines on more sound financial footing.

The merged airline will take the American Airlines name and will be bigger than Chicago-based United Airlines. It will have a global network with nearly 6,700 daily flights to more than 330 destinations in more than 50 countries and more than 100,000 employees worldwide.

The merged airline will now begin the tricky process of integrating two large airlines, which has proved problematic in other mergers, notably United with Continental Airlines, a combination announced in 2010.

The airlines' separate websites, aa.com and usairways.com, as well as the two airlines' reservations systems and loyalty programs, will continue to operate separately until further in the integration process.

The newly merged airlines will be part of American's Oneworld Alliance. US Airways will exit its current membership in the Star Alliance on March 30 and immediately enter Oneworld the next day, the airlines said.

"Our people, our customers and the communities we serve around the world have been anticipating the arrival of the new American," Doug Parker, CEO of American Airlines, said in a statement. "We are taking the best of both US Airways and American Airlines to create a formidable competitor, better positioned to deliver for all of our stakeholders. We look forward to integrating our companies quickly and efficiently so the significant benefits of the merger can be realized."

The process to receive a single operating certificate, which will allow then airlines to combine operations, will take 18 to 24 months, the airlines said. In the short term, it will be business as usual, as the airline continue to operate mostly separately.

The first evidence of a combined airline will come in early January, when the airlines begin offering some reciprocal frequent-flier benefits.

Shares of the new airline, formally called American Airlines Group, will begin trading on the Nasdaq under the ticker AAL.

Holders of US Airways, which closed last week at $22.55, will get shares of the new company in a one-for-one exchange. The stock may reach $39 by 2015, estimated Hunter Keay, a Wolfe Research Inc. analyst, while Jamie Baker of JPMorgan Chase & Co. sees Fort Worth, Texas-based American rising to $37.

The merger comes as AMR emerges from two years in bankruptcy protection under the deal, and CEO Tom Horton will step aside to become chairman until the first annual meeting

gkarp@tribune.com

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Original headline: American, US Airways complete merger


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