American Airlines and US Airways $11bn link-up

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A DEAL to create the world’s biggest airline through the $11 billion (£7bn) merger of American Airlines and US Airways could be unveiled as early as this week, sources said yesterday.

Under terms of a deal that are still being finalised, US Airways chief executive Doug Parker would take the top job at the combined airline, while American Airlines parent company AMR’s Tom Horton would serve as non-executive chairman of the board until the spring of 2014, when the new group holds its first annual meeting, the sources said.

Such a deal would come more than 14 months after the parent of American Airlines filed for bankruptcy in November 2011, and would mark the last combination of legacy US carriers, following the Delta-Northwest and United-Continental mergers.

The all-stock merger is expected to value the combined carrier at between $10.5bn and $11bn, and would give AMR creditors 72 per cent of the ownership in the new company and US Airways shareholders the rest, the sources added.

As part of the merger, US Airways will leave Star Alliance to join the Oneworld global airline alliance, of which American Airlines is an anchor member along with British Airways, the people familiar with the matter said.

The airlines think a merger will bring about $1bn in revenue and cost benefits, they said.

AMR and US Airways declined to comment.