American Airlines and US Airways announce merger

By PERRY GOURLEY
Published on 15/02/2013 00:00

AMERICAN Airlines and US Airways yesterday unveiled an $11 billion (£7bn) all-share merger deal which will create one of the world’s biggest carriers.

Under the tie-up US Airways’ management team, led by chief executive Doug Parker, will assume operational control of the airline. Creditors of bankrupt American Airlines parent company AMR will end up owning 72 per cent of the combined carrier and take five seats on the 12-member board.

AMR chief executive Tom Horton said: “It has been the most successful airline restructuring in history, and we had been very focused from the outset on creating the most value for our owners.”

The airline, which will carry the American Airlines name, will be 2 per cent larger than current number one United Continental in terms of traffic measured in the number of miles flown by paying passengers worldwide.

The merger, subject to approvals from regulators and the US Bankruptcy Court, could help speed up the recovery of the country’s airline industry as carriers will have more room to boost fares as yet another competitor is eliminated.

The tie-up is the fourth major merger in the US airline industry since 2008, when Delta Air Lines bought Northwest. United and Continental merged in 2010, and Southwest Airlines bought discount rival AirTran Holdings in 2011.

The enlarged American Airlines would return to the leadership position among US carriers that it lost in recent years as high labour costs made it difficult to compete with restructured rivals.