AA, US Airways confirm US$11b merger

AA, US Airways confirm US$11b merger
By admin

American Airlines and US Airways have confirmed they will merge to create the world's largest airline with a market value of US$11 billion.

The deal, which is subject to approval from competition regulators and a US bankruptcy court, will see the combined airlines operate 6,700 flights to 336 destinations in 56 countries.

It will take the American Airlines name, be based in Dallas-Fort Worth and be headed by US Airways chief executive Doug Parker.

The regional carriers owned by AA and US Airways – American Eagle and Piedmont and PSA respectively – are expected to be retained.

The airline will essentially be under the control of creditors of the bankrupt AA parent company.

Tom Horton, chairman, president and chief executive of AA, said: "We are proud to launch the new American Airlines – a premier global carrier well equipped to compete and win against the best in the world.

"Together we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners and the many communities we serve."

The networks of the carriers are "highly complementary", he added.

Horton said the merger follows "months of exhaustive analysis and a thorough review of all alternatives".

"We concluded that this merger is the best outcome for our company, delivering not only the greatest value for our financial stakeholders but also positioning us well for sustainable success over the long term," he said.

Doug Parker, who will become chief executive of the combined airline, said the deal will give the carriers greater "scale, breadth and capabilities" to compete in such a competitive aviation landscape.

"Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to travel, when they want to go," he said.

American Airlines will remain with Oneworld – US Airways was a Star Alliance member – with an expanded relationship with Qantas likely.

Qantas already has a major partnership with AA on routes from Dallas-Fort Worth.
AA and US Airways said they expect one time transition costs of US$1.2 billion over the next three years while annual savings could grow to more than US$1 billion by 2015.

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