RSS
 Add News     Print  
Article List
New American Airlines emerges as world’s top carrier Group provides 6,700 daily flights to more than 330 destinations

WASHINGTON, Dec 9, (Agencies): American Airlines and US Airways merged Monday to create the new American Airlines, the world’s largest airline, after overcoming concerns that it will hurt competition and raise travelers’ costs. AMR Corporation, the former parent of American Airlines, and US Airways Group announced in a statement they had completed the deal after AMR emerged from bankruptcy protection. The new American Airlines Group is a goliath, providing nearly 6,700 daily flights to more than 330 destinations in more than 50 countries. “Our people, our customers and the communities we serve around the world have been anticipating the arrival of the new American,” said Doug Parker, chief executive of American Airlines and the former chairman and CEO of US Airways.

“We are taking the best of both US Airways and American Airlines to create a formidable competitor, better positioned to deliver for all of our stakeholders. We look forward to integrating our companies quickly and efficiently so the significant benefits of the merger can be realized.”

The plan to create a third giant carrier to compete with US rivals United and Delta cleared a major hurdle in November after the Justice Department announced a settlement to resolve antitrust complaints seeking to block the merger. Under the agreement, AMR and US Airways are giving up slots and other rights at seven key airports to low-cost airlines. The agreement was joined by six states and Washington, DC, which also sought to block the merger, saying the new airline would have near-monopoly power in some routes and airports. The two airlines are abandoning a significant number of slots at two of the busiest airports on the East Coast — 34 at New York’s La Guardia and 104 at Washington’s Reagan National. The new American is committed to maintaining hubs in New York’s Kennedy International, Los Angeles, Miami, Chicago’s O’Hare, Philadelphia, Phoenix and Charlotte for three years.

The companies said Monday there would be no immediate change to their operations. The integration of the two companies to achieve a Single Operating Certificate is expected to take approximately 18 to 24 months, they said. As part of the combination, US Airways will exit Star Alliance on March 30 and will enter the next day the oneworld alliance, joining American with a group of airlines including British Airways, Cathay Pacific, Japan Airlines and Qatar Airways. “Customers will begin to see enhancements to their experience in early January, including the ability to earn and redeem miles when traveling on either American Airlines or US Airways, reciprocal American Admirals Club and US Airways Club benefits, and reciprocal elite recognition,” the companies said. The new American Airlines is expected to generate more than $1 billion a year in synergies by 2015, they said.

American, which filed for bankruptcy protection in late 2011, won approval from the bankruptcy court in September to go ahead with the $11 billion merger plan announced in February. The August antitrust lawsuit stalled the merger, which the companies had expected to complete during the third quarter after garnering the approval of shareholders, creditors and European regulators. The lawsuit argued that the tie-up would mean four airlines — which it said have a history of “tacit coordination” instead of competition — would control more than 80 percent of the US commercial air travel market. US Airways and American alone compete directly on more than 1,000 routes, it argued. Shares in American Airlines began trading Monday at $23.95 on the Nasdaq exchange under the ticker symbol AAL. After 90 minutes of trade, the stock was at $24.49, after trading as low as $23.45.

American’s old parent, AMR Corp., is gone, replaced by the new American Airlines Group Inc. CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked on stage by executives and labor leaders of both airlines and in front of a crowd of cheering employees. “Our goal here is to go and restore American Airlines to its position as the greatest airline in the world,” Parker said. The largest airline as recently as 2008, American struggled through a decade of huge losses and fell behind United and Delta in size. For passengers, the merger won’t mean many immediate changes. Whether the deal leads to higher ticket prices, the issue at the heart of legal challenges from the government and consumer groups, remains to be seen. Parker dismissed the notion that fewer airlines will lead to higher airfares because, he said, the new American plans to keep all the service offered by American and US Airways.

“Airline prices are like prices in other businesses - they track with supply and demand, and we’re not reducing any of the supply,” he said in an interview with The Associated Press. Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other’s flights, increasing the destinations available to customers of both. It will take about two years to combine American’s fleet and workforce with those of US Airways, Parker said. US Airways will join Continental, Northwest and other airlines that now exist only in the memories of employees and longtime travelers. Airline mergers are notoriously troublesome. United has been plagued by computer-network problems since combining with Continental, leading to outages and flight delays. Airlines’ technology systems handle everything from passenger information to weight and balance calculations on every flight.

Then there is the difficulty in merging two sets of employees who, in this case, are represented by different unions. US Airways has been down that path before - it still hasn’t fully integrated pilot crews since its merger with America West, and that deal closed in 2005. Unions at American received Parker like a conquering hero. Their support for a merger led by US Airways executives was a turning point when AMR CEO Tom Horton still hoped to keep his airline independent. For their efforts, the unions won stock in the new company. On Monday, Parker made symbolic moves to extend a hand to labor - painting over parking spaces once reserved for executives, and asking Nasdaq to inscribe a commemorative opening bell to the employees instead of to him. Still, the honeymoon could be a short one.

“His greatest challenge is keeping positive sentiment on his side,” said Vicki Bryan, an analyst with bond-research firm Gimme Credit. “He’s at the peak of ‘happy’ right now. He’s got to keep the unions happy; he’s got to keep the computers running; he’s got to keep the balloon in the air.” In morning trading, new shares of American Airlines Group were up 45 cents to $24.55.

Read By: 1074
Comments: 0
Rated:

Comments
You must login to add comments ...
About Us   |   RSS   |   Contact Us   |   Feedback   |   Advertise With Us