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American-US Airways Merger Announcement ‘Within a Week’

American-US Airways Merger Announcement ‘Within a Week’

According to a Reuters report on Monday, American and US Airways “could announce a deal within a week” confirming the expected merger and divulging details of the agreement.

Although neither company would confirm specifics of the discussions, here’s what we know or can guess with a high degree of certainty:

  • The new company will retain the “American Airlines” name and be based at American’s Ft. Worth headquarters.
  • US Airways chief Doug Parker will be the new CEO. American chief Tom Horton will be named non-executive chairman of the new board and remain in that position at least until the spring of 2014 when the company’s first annual shareholder meeting will be held.
  • American’s creditors would own around 72 percent of the new company; US Airways shareholders would get the rest.
  • Based on 2012 results, the new company would have generated $38.7 billion in revenue.
  • The merger will generate around $1 billion in combined extra revenue and cost savings for the new company.
  • The new company will be valued at around $11 billion.
  • Combining the third- and fifth-largest U.S. carriers will create the world’s largest airline, in terms of passenger traffic.
  • Prior to any post-merger rationalization, the two airlines will have around 94,000 employees, 950 planes, 6,500 daily flights, and nine major hubs (American: Dallas, Miami, Chicago, Los Angeles, New York; US Airways: Phoenix, Philadelphia, Charlotte).
  • The new American will be a member of the oneworld alliance, not the Star Alliance.
  • The merger will be subject to review and approval by U.S. regulators. That shouldn’t be a problem since there is relatively little overlap between the two airlines’ networks.

Reader Reality Check

Is the American-US Airways merger, with US Airways’ chief Doug Parker in charge of the new company, good for the traveling public?

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