Question: What do Dallas, Phoenix, Chicago, and Charlotte have in common?
Answer: A whole lot more now than they did just twenty-four hours ago.
American Airlines and US Airways today announced their intention to merge, ending months—if not years—of rumor and speculation. The move, approved yesterday by the boards of each company, will create the world’s largest airline if approved by a bankruptcy judge and federal regulators.
The last in a long series of airline mega-mergers that began in 2001, the deal was widely anticipated by industry watchers. Ft. Worth TX-based American Airlines (AA) and Tempe, AZ-based US Airways (US) are the last two legacy carriers left to catch the proverbial flowers following the marriages of Delta/Northwest in 2008 and United/Continental in 2010. With AA fighting its way out of bankruptcy since late 2011 and US slowly getting crowded out by significantly larger rivals, the consolidation spares them both from what likely would have been a gradual descent into the history books. The merger marriage, providentially announced on an internationally recognized day of love and commitment, will see American retaining its name and branding while current US Airways CEO Doug Parker will retain control over the new AA.
Speaking of Parker, the deal represents a major victory for him and his team. Despite initially being rebuffed by AA Parker kept at it, ultimately winning over the support of three key unions at American. Parker then utilized union support to sweet talk American’s creditors into believing that a merger was now the only way out of the hole. Creditors were sold and pressured AA’s board to reconsider their initial rejection, ultimately leading to the long expected marriage announcement we have today.
The combined carrier will possess well over 900 airplanes and hundreds of orders for new ones. Hubs will include the American strongholds of Dallas, Miami, Chicago, New York, and LA along with US’s Charlotte, Philadelphia, and Phoenix. The new American would gain an expanded presence to international destinations in Latin America, Europe, and the Caribbean while solidifying an already strong presence in domestic markets such a New York LaGuardia and Washington Reagan. The new AA will also remain part of the oneworld alliance, and intends to maintain the more than 6,700 daily flights to 336 destinations in 56 countries currently offered as of today. AA said in a press release this morning that regional carriers American Eagle, PSA, and Piedmont “will continue to operate as distinct entities.”
Of course the deal still has to be approved by both AA’s bankruptcy judge in New York and federal regulators in Washington DC along with US Airways shareholders. If approved full integration would likely be years down the road, though Parker has quoted 18 months from the date the marriage gets the go ahead from the feds. The announcement also comes on the heels of American’s debut of their new 777-300 two weeks ago. The airplane, fresh with new livery and a serious cabin overhaul, aims to rejuvenate a positive public perception of the airlines service and product.
Updated 2/14/13 @ 1235ET
