The new American Airlines: Anatomy of an $11 billion mega merger
Skift Take
It's tempting to say that US Airways did everything right in the run up to the merger, because it certainly appears that its leadership did. Their mix of strength and lack of ego led the way for exactly the type of airline they wanted.
It started with a phone call on Nov. 29, 2011, the day that AMR Corp. filed for bankruptcy.
US Airways Chief Executive Doug Parker called his former cubicle mate at American Airlines, Tom Horton, to congratulate him on his promotion to CEO of the Fort Worth-based carrier.
Parker believed that a union with American Airlines was the next logical step in industry consolidation. But a merger was the furthest thing from Horton's mind.
"He was upfront from the beginning: 'Look, we're always willing to talk, but you need to understand that our objective here is to get in and get out as fast as we can and we're laser-focused on that,'" Parker said in an interview last summer.
The two executives, both 51, had known each other since the 1980s, when they worked together in American's finance department under then-CEO Bob Crandall. But now, some 25 years later, they had different views on what American's future should be and what was best for the airline industry.
Parker thought it made perfect financial sense for American and US Airways, the nation's No. 3 and No. 5 airlines, to join forces. Combined, they would create the world's largest carrier, with a network that could rival industry leader United Continental and Delta Air Lines, which was a close second in terms of revenue.
Horton didn't agree. He believed American could get its operating costs under control and emerge from bankruptcy as an independent carrier, with plans to increase its network by 20 percent and then contemplate a merger.
But as 2012 progressed and AMR terminated aging aircraft leases and signed new cost-cutting labor contracts, the pressure on Horton to consider strategic alternatives increased, particularly after an ad hoc group of bondholders entered the confidential discussions among American, US Airways and the unsecured creditors committee in December.
Horton says he was never opposed to the idea of a merger but thought it was premature to consider before the carrier restructured its finances. He wanted American to negotiate from a position of strength.
"I'm not really sure my mind changed," said Horton, AMR's former chief financial officer, who became chief executive when Gerard Arpey resigned on the day of the bankruptcy filing. "
