US Airways Formally Proposes American Airlines Merger: Report
The report emerged just hours after American’s pilot union, the Allied Pilots Association, overwhelmingly ratified a new contract with the airline.
Under the proposed all-stock deal, WSJ says bankrupt American’s creditors would receive 70 percent of the new company’s shares while US Airways shareholders would get the remaining 30 percent. US Airways CEO Doug Parker would head the new company. The new company would keep the American name.
Based on current market values, the resulting firm would become the nation’s second largest carrier at around $8.5 billion, just short of top-ranked Delta’s $8.6 billion and exceeding that of United’s $6.8 billion.
The new US+American would be the largest airline by fleet size: 941 mainline aircraft, versus 716 at Delta and 707 at United.
US Airways has made no secret about its desire to merge with American, but Friday’s report marks the most formal step in that direction so far. American’s labor unions have all come out in favor of answering to US Airways bosses. American’s leadership, on the other hand, has expressed its desire to emerge from bankruptcy as an independent company, though their judgement might be clouded by the massive $600 million payday AA CEO Tom Horton and his team get to split if they pull it off.