American Airlines and US Airways merged to create the world’s largest airline…

American Airlines and US Airways merged yesterday to create the new American Airlines, the world’s largest airline, after overcoming concerns that it will hurt competition and raise travellers’ costs.

AMR Corp, 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 realised.”

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 yesterday 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 travelling 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 $1bn 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 $11bn 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% 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 yesterday 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. Source: AFP / Gulf Times

Leave a Reply