Business

American, US Airways announce $11B merger

Thursday, February 14, 2013

American Airlines and US Airways said Thursday they have agreed to merge in an $11 billion deal.

The deal caps a turbulent half-decade of bankruptcies and consolidation for the airline industry in the U.S.

The merger will create the world's biggest airline, which will keep the American Airlines name, but will be run by current US Airways CEO Doug Parker.

The combined airline will offer more than 6,700 daily flights to some 340 destinations in 56 countries. American and US Airways officials say the two companies will complement each other perfectly because they share very few of the same routes.

By merging, they'll be able to serve 187,000 passengers and employ 100,000 people. With the new combined fleet, their goal will be to go after corporate customers.

"The most modern fleet, a solid financial foundation and the finest team of people in the industry - we will once again be an industry leader, worthy of the name American Airlines. America's flag carrier," said Tom Horton, CEO of American Airlines.

The new fleet will be headquartered in Dallas with corporate and operational facilities in Phoenix. It will maintain all of its hubs and destinations.

Frequent flyer miles from both airlines will be honored by the new carrier, but analysts say some air fares are expected to go up. Experts point to the 11-percent increase in cost of domestic roundtrip flights since the mergers of Delta and Northwest, United and Continental and Southwest and AirTran.

The deal reduces the number of major U.S. airlines to four: the new American, United, Delta and Southwest.

Travelers appear optimistic about the merger.

"It'll be nice to have the combined reward system. It will be nice not have to worry to be able to book through one company instead of having to look around for lots of different flights," said traveler Trey Barnett.

The merger still needs to be approved by the Department of Transportation, the Justice Department and by the court that is overseeing the bankruptcy protection case of the parent company of American Airlines. US Airways shareholders will also have to sign off on the deal.

The Associated Press contributed to this report.

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