News Column

American and US Airways Merger Gets Court Approval

March 28, 2013

A judge Wednesday approved the merger of American Airlines and US Airways. US bankruptcy judge Sean Lane in Manhattan said the merger was a "terrific result."

The 11-billion-dollar mega deal will form the world's largest carrier and operate under the American Airlines brand. The shareholders of American Airlines, which has been under bankruptcy protection, will own 72 per cent in the joint company, while US Airways will hold 28 per cent.

Judge Lane rejected a 20-million-dollar severance deal for American Airlines chief executive Tom Horton. The US government's bankruptcy watchdog, the US Trustee, opposed the payout calling it a "golden parachute."

The new airline will operate 1,500 aircraft, with 600 more on order, and have an annual turnover of almost 39 billion dollars.

It will offer more than 6,700 daily flights to 336 destinations in 56 countries and maintain all hubs now served by either carrier, while being a member of the Oneworld alliance.

"The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace," said Doug Parker, the outgoing cheif executive of US Airways, in February when the deal was announced.

American Airlines parent company AMR Corp declared bankruptcy in November 2011, and has kept operating under Chapter 11 bankruptcy protection from creditors while it reorganized its debt.

US Airways had been searching for a partner since early 2012, after many rivals merged to lower costs through sharing maintenance personnel and booking systems, among other measures.

The airline industry has seen a spate of mergers since the 9/11 attacks of 2001 battered the sector and carriers were also hit by fluctuating fuel prices and the rise of budget airlines.

In 2012, Delta Air Lines swallowed the smaller Northwest Airlines, while United Airlines joined forces with Continental.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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