Charlotte will be a major hub for the nation's largest airline, executives of
US Airways and American Airlines said Thursday while detailing their plans to
merge and create an $11 billion company.
The new carrier will keep the American Airlines name, with headquarters in Fort Worth, Texas. Doug Parker, the US Airways CEO who pushed for the deal for more than a year, will lead the combined company. Tom Horton, head of American parent AMR Corp., will take the role of non-executive chairman through mid-2014.
The all-stock deal will create an airline with nine U.S. hubs, more than 1,500 airplanes, 100 million frequent fliers and a projected $40 billion in annual revenue. A deal still must be approved by American Airlines' bankruptcy court judge and antitrust regulators. Parker said he hoped the companies will be able to close the deal by the third quarter of this year.
"Charlotte is a critical part of the US Airways system...Now that system is just going to be stronger by combining it with American Airlines," Parker told the Observer. "One of the few holes in the American system is a Southeast hub, and Charlotte fills that void." Parker said Charlotte could add more international flights following the merger.
The combined airline will operate 653 flights a day from Charlotte Douglas International Airport -- more than 90 percent of Charlotte's total. More than three-quarters of the passengers will be connecting from one flight to another, the same as now.
No other major airport is so concentrated in one carrier and so dependent on connecting traffic. That has prompted some analysts to speculate that Charlotte's hub could be at risk if the merged airline trims flights.
The airport also has more than $820 million worth of bonds outstanding, part of an expansion that includes a new parking deck and a planned new runway. Debt service on those bonds is paid for largely with fees the airlines pay to use Charlotte Douglas. Fitch Ratings said this week that the merger could put hub airports at risk.
"As history has indicated, carriers have demonstrated a willingness to pare or eliminate large-scale hubbing services in airports such as in Pittsburgh, St. Louis, Cincinnati and Memphis," Fitch analysts wrote in a note to clients.
Robert Poole, an aviation expert and director of transportation policy at the Reason Foundation, questioned the need for nine U.S. hubs in the merged airline.
"Nobody has that many hubs," Poole told The Associated Press. "These are risks for cities, particularly when they do airport expansions based on having a large transfer hub. You get an airport configured for something that's way more than the size of your community justifies in terms of origin and destination traffic, and then if the hub goes away -- Whoops! You are really stuck."
But local leaders said they believe the merger will be good for Charlotte.
"Their broad network will significantly expand Charlotte's connection to the rest of the world. This will be good for our businesses and economy," said Charlotte Chamber CEO Bob Morgan, in a statement.
Charlotte Mayor Anthony Foxx said Thursday that he has been in touch with Parker in recent weeks, but hadn't received much information on details of the merger.
"All indications are this merger will be good for Charlotte," Foxx said.
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women