American Airlines and US Airways Merger: Skift Liveblog
Updates by Skift Staff
It’s done. American Airlines and US Airways confirmed their merger this morning.
We’ve been paying close attention to developments at American Airlines and its potential merger with US Airways since before our August launch. To keep you up to date on everything that happens, we’ll be live blogging the situation on this page over the following days and weeks.
Follow the latest news and breaking events here, as well as drill down into the long saga, below. You can also read past coverage of the key players: American Airlines’ CEO Tom Horton, US Airways CEO Doug Parker, and the labor unions, too.
Follow @skiftnews on Twitter for breaking news
Posted: February 28, 12:33pm
U.S. Sen. Bob Casey urged the carriers not to cut jobs or air service in Pennsylvania. Casey, a Democrat from Scranton, released a letter on Wednesday that he wrote to American CEO Thomas Horton and US Airways CEO Doug Parker asking them to “maintain” the air carriers’ combined 1,900 jobs in Southwest Pennsylvania. US Airways accounts for 1,820 of those positions.
I ask that you consider preserving overlapping routes that are currently served by both carriers to avoid a reduction in air service levels, particularly into the New York market. Preservation of routes to JFK and LaGuardia is critical to providing international connections to Pennsylvania. In addition to Pittsburgh and Philadelphia, American and US Airways provide a significant level of service at smaller airports around the state. Maintaining service to these cities is essential to economic development, particularly with the increased traffic due Marcellus Shale drilling. I urge you to not only continue service to smaller airports in the Commonwealth, but also consider expanding service in order to meet the rising demands of the natural gas industry.
Posted: February 28, 12:30pm
Allied Pilots Association president Keith Wilson advised pilots Wednesday not to get too worked up yet about the issue of combining the seniority lists of US Airways and American Airlines after the proposed merger. The reason: It’ll probably be a long time before the two sides get to that point.
Posted: February 27, 1:40pm
Executives from American Airlines and US Airways on Tuesday answered questions from lawmakers about their planned merger. Many of the questions had to do with potential prices increases and concerns about losing regional hubs.
While it’s the job of members of Congress to look out for their districts, the job of airlines is to fly where people want to travel in and out of. These two things don’t always match up.
Posted: February 26, 11:25am
Executives from American Airlines and US Airways have been chosen to lead the airlines through the gritty details of the merger. US Airways President Scott Kirby and Chief Restructuring Office Bev Goulet will develop plans so the airlines can close the $11 billion merger by Q3 2013.
For more background on the leaders:
Kirby, who has been US Airways president since 2006, had a major role in negotiating with labor and analyzing the revenue and costs benefits expected from the merger, the memo said.
Goulet was named American chief restructuring officer in December 2011 and has served as vice president for corporate development at the carrier since 2002. She had a prime role in negotiating the equity splits of 28 percent for US Airways and 72 percent for American stakeholders in the merger.
Posted: February 26, 9:29am
Chairman Bachus asks the two airline execs how announced $1.5 billion in synergies would help the traveling public.
Both Johnson of US Airways and Kennedy of American said the synergies will enable the new American to invest in the airline.
On the issues of airline alliances, US Airways would, in effect, leave the Star Alliance and join American’s oneworld.
Johnson of US Airways said the airline was basically a “second class” member of the Star Alliance and not part of the joint venture.
Oneworld will benefit, Johnson said, because although it already had access to American hubs at JFK and Miami, oneworld will get new access to Charlotte and Philadelphia.
Posted: February 26, 8:55am
Wow, they let women participate, too. The lone woman among the committee and witnesses, Rep. Suzan Delbene, asks Mitchell how the merger would impact price transparency.
Mitchell argues that IATA’s move to develop its New Distribution Capability would be accelerated because US Airways, which has always been a maverick when it comes to travel distribution, would be swallowed up.
Mitchell notes that years ago when airlines were offering web-only fares on their own websites alone, US Airways broke ranks and started offering them to travel agents, as well.
Posted: February 26, 8:55am
In response to a question, Mitchell of the BTC argues if the AA-US Airways merger goes through there would be an unprecedented capability for airlines to coordinate their fares.
Kennedy of AA counters that he has been in the airline industry for 29 years, and that the fare climate is “ultracomompetiive.” Consumers would get more choices and the new American would be better able to compete if the merger is approved.
Stephen Johnson of US Airways acknowledges that American could emerge from bankruptcy as a standalone airline, but argues that the two airlines’ customers have been pleading for a larger airline, and have been abandoning the two carriers to fly instead on Delta and United-Continental.
In addition, Johnson argued that the merger would give the new American the opportunity to pay employees on par with Delta and United.
Posted: February 26, 8:19am
Rep. Cohen asks Mitchell of BTC whether hub cities will be hurt by the merger just as previous hub cities have suffered from past mergers.
Mitchell says its possible that Philadelphia, Charlotte and Phoenix could be impacted because of the geographies of the major hubs.
Posted: February 26, 8:14am
Subcommittee chairman Bachus defends the idea of an AA-US Airways merger, saying there are few overlapping routes and there is labor support.
“From everything I’ve read, this is going to make a stronger airline,” Bachus said.
He argued that airline consolidation could have been stopped prior to the Delta-Northwest merger and the United-Continental merger, but now that gives them a distinct advantage over American and US Airways.
Posted: February 26, 8:14am
Chairman Bachus asks BTC’s Mitchell what would be the negative consequences if AA-USAir merger doesn’t go through?
Mitchell replies that he doesn’t buy into that argument, noting that AA’s Tom Horton repeatedly stated that AA could emerge from bankruptcy as a standalone airline. And, US Airways is doing very well financially, he adds.
“I just don’t buy into the notion that these are failing firms,” Mitchell says.
Posted: February 26, 7:59am
Kevin Mitchell, representing the one-member Business Travel Coalition, and speaking for the American Antitrust Institute, claims airlines and IATA are planning on ending published fares in their proposed New Distribution Capability initiative.
According to Mitchell, travelers would have to submit their personal information, including names and even marital status, before being able to view fare quotes.
Mitchell’s interpretation of the airline/IATA vision has no chance in hell of becoming reality.
Posted: February 26, 7:51am
US Airways Stephen Johnson testifies the merger would create new international opportunities, and the third legacy airline that would be able to compete internationally.
On the domestic front, Johnson testified before the Congressional committee that the merger would enable the new American to implement a cost structure to compete with Southwest, JetBlue, Allegiant, Spirit, and Virgin America.
Posted: February 26, 7:38am
Rep. Conyers wondered whether Southwest will continue to play the traditional role of low cost carriers with competitive fares now that Southwest is large enough to be part of the big airline club.
Posted: February 26, 7:31am
Rep. Steve Cohen blasts prior appearance of Delta CEO Richard Anderson during Northwest merger when he promised Memphis would get additional international flights, and better service. Cohen said Anderson talked about how he loves the city and the ribs. But, instead today Memphis has 40% fewer flights, and Delta has used its position to block competitors from entering the market, Cohen said.
Posted: February 26, 7:22am
The House Subcommittee on Regulatory Reform, Commercial and Antitrust Law hearing on the U.S. Airways-American Airlines merger is under way.
Rep. John Conyers noted that American is going to emerge from bankruptcy with billions of dollars and US Airways has achieved record profits. Conyers said both airlines are capable of surviving and even thriving on their own.
He said the airline have a high burden to show that the merger wouldn’t harm competition, saying past mergers have shown that fares have risen on formerly overlapping routes. He wondered if this could lead to tacit agreement among the three remaining legacy carriers to raise prices.
Posted: February 25, 3:06pm
US Airways and American Airlines made big strides prior to the merger to get labor on board, but tough labor talks still lie ahead. New CEO Doug Parker will need to keep on wooing union leaders and rank and file if he wants the love fest to continue.
But despite the hugs and good will exchanged when the merger was announced Feb. 13, challenges lie ahead for the unions. Seniority integration lists need to be crafted. Workers must decide which union they want to represent them in contract talks with the merged carrier.
Posted: February 23, 10:58am
Lay Leno’s Tonight Show spoofs the new American TV ad about the merger, and as everything Leno, not that funny.
The original commercial:
Posted: February 22, 8:23am
The bankruptcy court hearing for the proposed merger between American and US Airways has been scheduled by U.S. bankruptcy judge Sean Lane for March 27, 2013.
Stakeholders who want to respond or object to the motion have until March 15 to do so.
Posted: February 22, 8:19am
Yesterday US Airways CEO Doug Parker held a meeting with the pilots unions of American Airlines and US Airways where everyone agreed that a new corporate culture would be needed moving forward. American pilots backed Parker and the US Airways integration early on, which helped smooth the road to the proposed merger.
The pilots unions issued the below joint statement following the pow wow:
Today the Allied Pilots Association National Officers and Board of Directors and the US Airline Pilots Association National Officers and Board of Pilot Representatives met at APA headquarters in Fort Worth, TX to affirm our mutual support of the merger between American Airlines and US Airways. The APA and USAPA leadership likewise agreed to work cooperatively to represent the best interests of all of our pilots.
The executives each delivered brief remarks to the pilot union boards and fielded questions from APA and USAPA representatives. The pilot representatives emphasized the need for a new culture that effectively engages employees and recognizes our pilots’ leadership role in the operation of the airline. The executives acknowledged the need to create a new corporate culture and to build trust and credibility between the airline’s management and front-line employees.
The APA and USAPA leadership look to the future with cautious optimism. The pilots represented by APA and USAPA have made substantial individual and collective sacrifices to put both airlines in a position to execute this merger, and we look forward to reaping the benefits of working for the world’s premier airline.
Posted: February 22, 8:06am
The new AA will also become the largest US carrier at London’s Heathrow airport, a strategic base for its international ventures, with most other overseas hubs located in North America and the Caribbean.
Posted: February 21, 6:50am
It appears the AMR Corp. name will soon go the way of Tom Horton and have little role in the new American Airlines. According to a U.S. regulatory filing, American Airlines Group Inc. will replace AMR “immediately after the effective time of the merger.”
On the outside it’s a small matter, but it speaks to the incoming management’s desire to simplify matters and make a break with the old corporate structure that angered employees and led American into bankruptcy.
Posted: February 21, 6:46am
Merging the technology systems that run US Airways and American Airlines could take as long as four years and cost millions of dollars, the Dallas Business Journal reports.
When you look at the combined company’s “to do” technology list, you can start to see why.
There are the reservation websites. The check-in systems (both online and via kiosks). Inventory systems. Schedule planning. Aircraft maintenance. Revenue accounting and management.
Glitches in reservation systems and online bookings are one of the potential hassles that customers will encounter on the airlines road to integration.
Posted: February 19, 10:21am
This lengthy piece by Associated Press’s Scott Mayerowitz gives the play-by-play on how the merger went down including details of meetings relocated to keep away from journalists’ prying eyes and what stakeholders ate each of their clandestine meetings.
When Parker and Kirby flew to Texas to make their case to the union, there was even a higher level of secrecy. They used a private jet and Bates personally made the 12-mile drive to the meeting site in the union’s red Chevrolet Suburban.
Union security guards were stationed around the Hilton Arlington, but when Bates pulled up at the back entrance, he recognized a reporter lurking nearby. He quickly made a U-turn and the meeting was moved to the union’s headquarters.
Posted: February 18, 1:38pm
The union representing AA flight attendants, The Association of Professional Flight Attendants, sent the following message to US Airways flight attendants after the formal announcement of a American-US Airways merger:
Posted: February 18, 1:10pm
The union representing flight attendants at American Airlines, The Association of Professional Flight Attendants, released previously-confidential information following the the official votes of American and US Airway’s boards last Thursday.
Part of the released information contained an explanation of the several layers of approval that stand between the airlines and a finalized merger, listed below:
What’s Left Before American Exits Bankruptcy?
- American files a Plan of Reorganization (“POR”) and Disclosure Statement that provides for, among other things, treatment of creditors and a merger transaction (Disclosure Statement includes an explanation of the Plan and the treatment of the various creditor classes)
- Disclosure Statement approved by court depending upon the requirements outlined by the US Bankruptcy Code
- Pursuant to a POR that provides for a merger of the two airlines, unsecured claims will receive a recovery in the form of equity in the new American
- Merger requires approval from the Department of Justice (DOJ) and would entail Hart-Scott-Rodino (“HSR”) review
- Bankruptcy Court approval is required at various stages and stakeholders (for example: UCC, creditors, labor, etc.) have an opportunity to object
- The POR must receive necessary votes from stakeholders to become “effective”
- More than 1/2 in number and at least 2/3 in dollar amount of impaired classes of creditors must vote in favor of the POR, among other requirements
- Once declared effective, a confirmed Plan will discharge the company’s outstanding debts and allow the company to emerge from Bankruptcy
- Typically, the process takes 3-4 months beginning with the filing of a POR, depending on whether there are stakeholders opposing the POR.
Posted: February 18, 9:23am
Andrea Ahles’ dissection of the merger as seen through Doug Parker and Tom Horton is a post-mortem, especially fun tidbits like this that reveal a some of the cloak and dagger behind it all:
APFA President Laura Glading met Kirby at Oceana a week later to confidentially talk about a merger.
“Everyone was a little bit nervous about one of us getting recognized,” Glading said.
She said that when she flew to Arizona a few days later to meet with Parker, she was recognized at the Phoenix airport and some asked on Facebook why she was there.
Posted: February 18, 5:42am
Business travel guru Joe Brancatelli gets his ten cents in about the merger in the Los Angeles Times today:
“These guys didn’t merge to make our lives better,” he said. “They merged for their own purposes.”
Posted: February 17, 11:28am
How will Delta and its hub of Atlanta get affected by the AA-US merger? From AJC, an analysis:
Delta remains dominant in Atlanta with more than three-quarters of the market share, followed by AirTran Airways, which with merger partner Southwest Airlines carries about 15 percent of the passengers…The direct effect on Atlanta fliers will be muted.
Neither American nor US Airways has a big presence in Atlanta — together accounting for just over 3 percent of the traffic at Hartsfield-Jackson International Airport combined.
“We think it’s good for the industry,” Delta president Ed Bastian said at a breakfast meeting last week as the American-US Airways deal, announced Thursday, took shape. He added it would lead to more “disciplined” competition in the industry.
Posted: February 17, 11:23am
So how will the competitors get affected with the AA-US merger? Motley Fool goes through the options one by one:
United Continental is likely to be the biggest loser. In a message to employees, CEO Jeff Smisek tried to put a positive spin on matters by focusing on the benefits of consolidation. However, as part of the merger, US Airways is moving from United’s Star Alliance to American’s Oneworld global alliance.
Delta is likely to see a more limited impact from the merger. Delta also competes in the New York and Los Angeles markets and has been working particularly hard to gain share in New York. American’s East Coast strategy will have a major impact on whether Delta benefits from the merger.
Posted: February 15, 10:23am
But, two groups of passengers who are especially antsy are those who have made it to the ranks of the two airlines’ million miler programs, which designate them for lifetime elite status.
Will they get short-changed in the transition?
Will they become, well, less elite?
The Points Guy takes up the issue.
Posted: February 15, 9:42am
American Airlines’ maintenance center in Tulsa likely got a new lease on life in the merger. Employees at the 6,000+ facility have been on shaky ground since American announced its bankruptcy in November on 2011.
You have to realize that we have been on one hell of a roller coaster ride and at least now we can see the end,” said John Hewitt, chairman of maintenance for Transport Workers Union Local 514 in Tulsa. “Of course we see it as a positive for our members because they have been working for a company that’s in bankruptcy. Now we get some new blood.
Posted: February 15, 9:21am
Not surprisingly, the usual suspects are rearing up to show their opposition to the AA-US merger announcement, and the answer, as always, lies somewhere in the middle. The two one-person-driven “industry groups” have come out in opposition of the merger, as expected.
From Consumer Travel Alliance, which has been vocal from the start when the merger rumors first came out last year:
The airlines, as expected, touted the benefits of their merger. There is only one problem — they aren’t claiming any net benefits for consumers. This is a merger that, even the airlines involved, don’t claim provides a net benefit to passengers. However, it clearly reduces competition and it focuses on financial stakeholders. Here’s a rundown on the merger benefits claimed by AA and US.
From Business Travel Coalition, which published a full length rebuttal of the merger:
From a consumer standpoint – individual traveler or corporate travel department – there are few benefits to offset the negative impacts of this proposed merger that include reduced competition, higher fares and fees and diminished service to small and mid-size communities. To be clear, there is benefit in a financially viable air transportation system. However, previous mergers have already enabled seat capacity cuts, higher fares and billions of dollars in fees for ancillary services resulting in a financially strengthening industry. As such, consumer harms from this merger are indeed exacerbated, as there are no substantial countervailing consumer benefits.
Full story: Benefits insufficient to offset consumer harms
Posted: February 14, 4:44pm
American CEO Tom Horton will receive $19.9 million in compensation as the airline merges with US Airways and he steps aside. Horton will receive the half-cash, half-stock payment when the deal closes.
Posted: February 14, 4:27pm
Not that it will happen unless some big regulatory issue blocks it, but in case the AA-US merger does not go through, there are large fees involved, as they are in any merger of this size. From the SEC filings:
The Merger Agreement contains certain termination rights for AMR and US Airways, and further provides that, upon termination of the Merger Agreement under specified circumstances, (i) AMR may be required to pay US Airways a termination fee of $135 million in the event it terminates the agreement to enter into a superior proposal and $195 million if US Airways terminates the Merger Agreement in the event of a knowing and deliberate breach of the Merger Agreement by AMR and (ii) US Airways may be required to pay AMR a termination fee of $55 million in the event it terminates the agreement to enter into a superior proposal and $195 million if AMR terminates the Merger Agreement in the event of a knowing and deliberate breach of the Merger Agreement by US Airways.
Posted: February 14, 4:21pm
No word today on AA-owned regional airline American Eagle’s fate, but unit CEO says a spinoff is possible as soon as this year, after an aborted attempt earlier in 2011.
Posted: February 14, 2:11pm
Robert Crandall, former American Airlines CEO, says his blood still “runs red, white and blue,” and he thinks all stakeholders will come out of the merger looking good.
Here’s a Bloomberg video:
Posted: February 14, 1:16pm
The messaging from the consumer media outlets covering the AA-US merger is mostly around the possibility of increasing fares with declining competition, which is a fear not unfounded. This short clip from AP speaks to that fear:
Posted: February 14, 9:48am
The American-US Airways merger is good news for travelers looking to fly between the states and Latin America, according to Fox News Latino. American Airlines is currently the dominated U.S. carrier in the region with more 111 weekly flights to Brazil alone.
“This is great news for Latin American,” Pedro Fábregas, vice president of American Airlines told Fox News Latino.
He added that “Latin America is super important” for this merger.
Though Fábregas would not specify why it would be good news for the region, the merger is widely expected to increase the number of flights to Latin America.
The deal will allow each airline to bring something different to the table. While U.S. Airways is the principal carrier to major domestic routes and key European cities, it is American Airline’s large presence in Latin America that could prove to be the most profitable aspect of the deal.
Posted: February 14, 9:40am
This infographic from CNN Money shows the bankruptcies and mergers that turned 10 major U.S. airlines into four mega-carriers in the past 12 years:
Posted: February 14, 9:28am
The new American Airlines will have more than 6,700 daily flights to 336 destinations in 56 countries. Last year the companies flew a combined 188 million passengers, and is expected to have about 101 million frequent flyer members moving forward.
“Size does matter when you’re going for the most lucrative parts of the business,” said Dan McKone, a partner at L.E.K. Consulting in Boston. “The attraction here is the merger is going to help them reclaim that leadership position they lost.”
Access to this many loyalty members will put will put the airline in a powerful position to negotiate with banks and others who want access to points and members.
Posted: February 14, 8:54am
Still individual airlines in their own right, US Airways is coming out with its first iPhone app in about a month, and American Airlines plans to continue its direct-connect to travel agencies drive. Meanwhile:
“On hot-button issues, Andrew Nocella, US Airways’ senior vice president of planning and marketing, argued that the merger won’t necessarily translate into fare increases.
“History has shown, Nocella said, that fares are ‘very competitive’ and that travelers have a lot of choice about which airline to fly.”
Posted: February 14, 8:44am
Industry expert George Hobica of Airfarewatchdog is more optimist than many of his peers on the potential impact of the American-US Airways merger. He outlines 9 “silver lining” reasons that the merger might actually be good for consumers including:
- There will be real savings for the airlines, which can be passed along to consumers.
- Fares won’t increase all that much, if at all.
- Service and flight experience should improve.
- You’ve been paying for these bankruptcies through your taxes all along.
- Foreign-based airlines are expanding service from the U.S., which helps keep international fares moderate.
Posted: February 14, 8:24am
The live stream of the press conference held by American Airlines and US Airways:
View more videos at: http://nbcdfw.com.
Posted: February 14, 8:04am
The new American’s first commercial is narrated by Mad Men’s Jon Hamm and takes a similar tone to those released when American debuted its new livery. The video states:
“It’s time to make a change, to become better version of ourselves, to be greater than expected, and more than you hope for. So starting now we begin a new chapter, one written in passion, ambition, and skills. One where two companies take the best of themselves to create something better. And when all is said and done, we’ll not only have become a bigger airline, but also something so much greater.”
Posted: February 14, 7:48am
Former American Airlines CEO Tom Horton and US Airways CEO Doug Parker quickly rehashed their 27-year relationship as they shared their plans for the merged airline on this morning’s conference call.
They noted their respect for one another and threw in some jabs during the friendly banter:
Horton spoke first, then Parker, and when he finished his initial remarks, Parker asked Horton if he had anything else to add.
Horton quipped that Parker had outlined the same plans as Horton had done a few minutes earlier.
“It just took you longer to say what I said,” Horton said.
Horton characterized Parker as a “first-rate leader.”
“I’m pleased to partner up with Doug to take the new American into the future,” Horton said.
Posted: February 14, 7:39am
US Airways is the clear winner in the announced merger gaining access toAmerican Airlines’ many domestic and international routes while American fills in some holes to its pervasive domestic coverage.
The new airline will have nine hubs in Miami, New York, Dallas/Fort Worth, Chicago, Los Angeles, Philadelphia, Washington, Phoenix and Charlotte, and it has come out with a state by state interactive chart and PDFs on those benefits, of course all PR positive.
Click here to see how the merger impacts the hub nearest you.
Posted: February 14, 5:41am
Listen in to the American Airlines/US Airways investor call happening from 8:30-9:30 EST.
Posted: February 14, 5:38am
The AMR-US Airways merger story is really one of smart leadership and management at US Airways and how it was able to pick apart the weaknesses at American that had been created by that carrier’s years of poor executive decisions.
Parker “recognized who effectively would be the arbiters of this deal and he put together a campaign to bring them over to his side,” said Robert Mann, an airline consultant in Port Washington, New York.
A person familiar with the discussions said Parker and US Airways President Scott Kirby decided early in the process that they would only proceed if they had the support of American employees. “That was a lesson learned from Delta. If we don’t have them, it won’t happen. And they led the way,” the person said.
Posted: February 14, 5:33am
Here is a highlight from American Airline’s SEC filing followed by the full report:
Posted: February 14, 5:29am
The SEC filing American Airlines and US Airways filed this morning is filled with enough pretty graphs and bullet points to fill an afternoon spent waiting on a delayed departure.
This it the US Airways’ investor presentation on the merger:
Posted: February 14, 5:24am
Here are some of Americans’ Twitter reactions from this morning and as news was breaking last night:
Posted: February 14, 5:15am
This video on NBC News outlines the facts that most flyers care about:
- Less competition equals a possible price hike
- Likely operating separately for first year
- Existing tickets honored
- Frequent flyer programs to merge in future
Posted: February 14, 5:11am
How will the international routes of the combined airlines be affected? This PR graphic from the companies tries to explain, PDF embedded below:
Posted: February 14, 4:59am
This new American is proud of the history each of its airlines brings and will likely play itself up as the ultimate U.S. airline based off its collective legacy in the industry.
This is the first video ad for the new American Airlines:
Posted: February 14, 4:55am
The new board of the combined “new American” airline, via Airline Biz Blog:
- Tom Horton will be chairman of the airline’s board of directors until its first annual meeting.
- Doug Parker will be CEO and be a member of the board of directors
- Parker will take the chairman’s title when Horton departs.
- The board will have 12 members initially, dropping to 11 upon Horton’s departure
- The board will have three members from American Airlines, four from US Airways and five from AMR’s creditors.
- Horton will remain chairman of the Oneworld airline alliance and be the airline’s representative to the International Air Transport Association until his departure from American Airlines.
Posted: February 14, 4:51am
A better interactive domestic and international route map of the combined company here.
Posted: February 14, 4:43am
How will this affect the domestic domestic routes of the combined airlines? A not-so-helpful-static map from the “new American”, if you can make out the details. For now, the key point is that the company will be based in Dallas-Fort Worth, and keep all of existing American and US Airways hubs and add more.
Posted: February 14, 4:37am
British Airways parent IAG, which has a big trans-continental partnership with American, sent out a congratulatory media note on the merger, focusing on continuing to work with AA as well as being part of the global airline alliance Oneworld:
We wish American Airlines and US Airways every success as they move forward with their merger plans.
AA is a key strategic partner for IAG and it has done a great job to restructure its business and establish the prospect of a bright and profitable future in tandem with US Airways.
We would like to pay tribute to the work that Tom Horton and Doug Parker have done to bring about this merger and look forward to working with them in their new roles.
Our relationship with the new airline will remain strong as we work together to enhance our transatlantic joint business and the oneworld alliance.
Posted: February 14, 4:34am
Also this morning, US Airways CEO sent out a letter to his employees on the merger with American:
The company will be headquartered in Dallas-Fort Worth while maintaining a significant corporate and operational presence in Phoenix.
Unlike other transactions that are premised on excessive cost cuts, this merger is about the opportunities to grow revenues, which will also create more opportunities for employees as the combined airline flies more people to more places.
Posted: February 14, 4:02am
US Airways announced the merger on Twitter this morning and quickly followed up to let passengers know that there would be no effect on current travel plans:
Posted: February 14, 4:01am
Done deal with further details and speeches during a scheduled 11 a.m. press conference. That was easy. Game on in this historic move for the U.S. — and global — aviation industry as the world’s largest airline is being formed.
“In the end, US Airways, once famously dismissed as “the ugly girl,” wooed bankrupt American Airlines’ unions and creditors, and wrangled an $11 billion merger agreement with AMR Corp., announced on Valentine’s Day, to create the globe’s largest airline.”
Posted: February 14, 3:55am
American Airlines took to Twitter first to announce the merger with US Airways this morning:
Posted: February 14, 3:00am
How many planes, flights, and employees does it take to run the world’s largest airline? Associated Press estimates the new American will have more than the following resources to help it run:
- 900 planes
- 3,200 daily flights
- 95,000 employees
These numbers aren’t counting regional affiliates, codeshare partners, or alliances that will make the new American the largest airline in the world in terms of traffic.
Posted: February 14, 12:33am
Scott Mayerowitz has a great story on Skift about the path to US Airways’ success, but it’s really about America West under new American Airlines CEO Doug Parker. A highlight:
Like most U.S. airlines, its origins can be traced back to carrying mail for the post office. The airline started such service in 1939. Its forbearers — Allegheny and Piedmont — soon expanded into shuttling passengers from one small city to another in western Pennsylvania, North Carolina and the Ohio River Valley. Neither were major players. When larger airlines abandoned cities, they swooped in, taking over the service.
That’s exactly what happened a few years ago, but US Air was the target, not the buyer.
Posted: February 13, 7:19pm
The Wall Street Journal has several terrific visuals that review the history of airline mergers in the United States, map out American’s and US Airways’ major hubs, and break down the market share of each major U.S. airline after the American-US Air merger, seen below:
Posted: February 13, 7:12pm
Deciding on a merger will seem like the easy part once American Airlines and US Airways actually start integrating operations, management, technology, and corporate culture.
Will US Airways’ “easygoing boyish” CEO Parker bring a new vibe to American?
Tempe, Ariz.-based US Airways is scrappier and more relaxed and has rebounded financially and operationally from hard times after its merger. American, a proud and button-down company that was king of the skies for decades, had been in a downward spiral for years and had a bad experience with its ill-timed 2001 purchase of Trans World Airlines.
Posted: February 13, 6:05pm
What will be the market share breakdown in United States airlines industry following this merger? The numbers, via Innovata:
- AA-US merged airline will be the world’s biggest in terms of traffic, with 26% of U.S. market share.
- United will be next, with 19.3% share.
- Delta, right behind, with 19.2% share.
- Southwest, which now inclues AirTran, will be at 18.2%.
- Rest, which includes jetBlue and others, will be 17.3% of total market.
Posted: February 13, 4:24pm
The Fort Worth Star-Telegram created this interactive chart to help consumers figures out what the American-US Airways merger means to them.
Posted: February 13, 3:57pm
The final pieces fall into place as Wall Street Journal reports the boards of American Airlines and US Airways have separately voted to approve a merger to create the world’s largest airline.
The boards of American Airlines parent AMR Corp. AAMRQ +3.59% and US Airways Group Inc. LCC +2.73% late Wednesday separately voted to approve a merger that would create the world’s largest airline, said people familiar with the matter.
The merger will be formally announced early Thursday morning, and a so-called plan support agreement outlining all of the deal’s details is set to be filed the same day with the U.S. Bankruptcy Court in New York overseeing American’s reorganization, the people said.
Posted: February 13, 3:18pm
Reuters reports that AMR creditors have approved the American-US Air merger:
The unsecured creditors committee of bankrupt American Airlines parent AMR Corp has approved an $11 billion merger with US Airways Group Inc , sources familiar with the situation said on Wednesday.
Posted: February 13, 2:57pm
What’s the impact of an American-US Airways merger outside of the U.S.? The Australian Business Traveller points out several ways the merger will impact Australian flyers:
- Qantas frequent flyers will see some additional connections available through the oneworld alliance via US Airways.
- Star Alliance frequent flyers will see US Airways connections and frequent flyer earning opportunities disappear.
- Australian travellers who use the AAdvantage program to accrue miles on Qantas should keep an eye on forums to see how their program will change.
- It’ll be easier for Australians connecting to the US east coast where US Airways has a major presence in DC, Charlotte, and Philadelphia.
Posted: February 13, 2:17pm
The American-US Airways merger may one day look like child’s play if the industry goes the way one expert predicts.
Frank Aquila, a mergers-and-acquisitions partner at New York’s Sullivan & Cromwell, tells Bloomberg that consolidation within the U.S. airline industry has likely come to an end, but cross-border deals could be up next.
The real question is whether we go beyond just national consolidations, and whether governments allow cross-border consolidations. To some extent the airlind industry has tried to replicate that by the alliances like Oneworld and Star Alliance, but those are not true consolidations in the way you have in other sectors. That’s really the next frontier, if you will, and I would think it’s in shareholders’ and consumers’ best interest that you be able to have an airline that operates on a global basis.
Posted: February 13, 1:56pm
What are the downsides to being the biggest airline in the world?
Jeffrey Pfeffer, a professor at Stanford University, points out that the largest U.S. airlines received the worst rankings for performance in the national Airline Quality Rating in 2012 and had lower operating margins than those of Alaska, Skywest, and JetBlue.
So no, the much anticipated American-US Airways merger is unlikely to be a success by any measure. That’s because, in the airline industry, as in many industries, size really does not matter for success, except possibly negatively.
Posted: February 13, 1:17pm
The board of American parent AMR Corp. is meeting now for official vote followed by a formal vote by the board of US Airways. An announcement is expected Thursday morning. Stay tuned…
Posted: February 13, 10:21am
American’s flagging Oneworld alliance has been falling behind SkyTeam and Star Alliance for years, but it may get a bump from US Airways if the merger goes through. It will be a little bump, though, as US Air’s addition does nothing to improve the alliance’s large holes in China and South America.
That said, it does have the market cornered on customers sitting on blue orbs:
Posted: February 13, 6:38am
One of the unexpected benefits of a potential American-US Airways merger is the availability of used aircraft on the market.
Budget carrier Allegiant Air pointed out on Tuesday that the merger will likely prompt American and US Airways to shed their outdated MD-80 and Boeing 757 jets. That’s great news for budget airlines like the Las Vegas-based carrier that fly all used jets and rely on a supply of cheap old parts to keep costs low.
Posted: February 13, 6:37am
One more way this merger makes sense: Few regulatory hurdles. Despite all the other consolidation that’s happened, American and US Air are more complementary than competitive, so U.S. government regulators will have fewer reservations about the merged airline dominating a number of markets and squeezing out competition.
“Overlapping routes are bad, and connecting routes are good,” said Herbert Hovenkamp, who teaches antitrust at the University of Iowa College of Law.
“If you put these two airlines on a map you’re going to see a lot of complementary routes but you’re not going to see very many where the two of them fly on the same route,” he added.
Posted: February 12, 1:18pm
Could the American-US Airways merger be the greatest corporate heist of all time?
That’s the opinion of Dallas Morning News columnist Mitchell Schnurman who praises US Airways for its methodical and calculated takeover of American Airlines — a victory for the airline that was supposedly once referred to as “the ugliest girl at the dance” by American management.
Schnurman sums up his take on the pending merger in the following:
This combination is more a takeover than a marriage and more hostile than consensual. From the beginning, it’s been a clash of visions, cultures and personalities. And the feisty little upstart, dissed and dismissed repeatedly by American management, made all the right moves and ended up on top.
Posted: February 12, 8:55am
No new routes, no competition, and no savings: Is this what U.S. fliers are looking forward to as a result of the American-US Airways merger? USA Today pegs Charles Leocha, Director of the Consumer Travel Alliance, to form a rebuttal to its own very positive piece on the potential results of creating America’s largest airline.
Since it looks like this merger is going to happen, Leocha suggests three potential steps to ensure continued competition in the consolidated industry:
Mandate full disclosure of extra fees charged by airlines so that consumers can efficiently comparison-shop the full price of travel, and purchase airfares and fees in one place.
Instruct airlines to add customer service plans to their contracts of carriage.
Consider allowing foreign carriers on domestic routes, especially smaller city routes abandoned by domestic carriers.
Posted: February 12, 8:16am
An American-US Airways merger is absolutely necessarily to bring stability to the U.S. airline industry at long last. That is the opinion of USA Today’s editorial board that wrote on Monday:
For many of the 35 years since the industry was deregulated, airlines have been in a state of near chaos. American Airlines is fighting its way out of Chapter 11 bankruptcy. Its would-be partner, US Airways, has been in and out of the process twice.
Strapped for cash and often laden with debt, the airlines have struggled to maintain customer service and to raise the money needed to purchase or lease aircraft. An American-US Airways merger would not solve all these problems. But it can be the last leg in bringing the industry much-needed stability.
The merger won’t only lead to a healthier industry, but will help fliers as well. With fewer airlines flying to more cities, it will be easier for travelers to use their frequent flier miles on the routes they’re looking for.
Posted: February 12, 5:45am
CNBC’S Philip LeBeau looks at stock performance of major airlines over the past few years and points to some likely investor disappointment when everything is settled.
One year runs like the one we’ve seen for LCC (US Airways) don’t come along very often for airline stocks. In fact, some are wondering if this is the end of the line for the run-up in airline stocks.
Posted: February 12, 5:39am
Would an American Airlines-US Airways marriage spoil the party for Delta at its new hub in LaGuardia?
Consider the slot pair tallies at LGA:
- Delta: 521
- American Airlines: 239
- US Airways: 125
- All other airlines: 260
Delta controls 45.5% of the 1,145 slots pairs at LGA, and AA and US Airways combined would operate 31.8%.
Not shabby. This would be a big factor in the competition between Delta and a new American Airlines in the congested New York market.
Posted: February 11, 11:32am
Both airlines are working to finish a deal before Friday, when nondisclosure agreements signed by some AMR bondholders expire. The future role of American’s CEO Tom Horton appears to be sticking point in the negotiations, which could be problematic given how long the parties have had to settle this.
Posted: February 11, 7:42am
Some interesting data from The Airline Zone blog, via masFlight/OAG, on American Airlines’ and US Airways’ largest markets that the other doesn’t serve.
For example, US Airways serves Providence (PVD), with 10,449 seats per week, Albany (ALB), with 6,398 seats, and Wilmington (ILM), with 5,999 seats, and American doesn’t have a presence in these markets, according to the blog.
On the other hand, US Airways is currently shut out of Guarulhos in Brazil (GRU), Tulsa (TUL) and Oklahoma City (OKC), where American offers 12,884, 9838 and 8,800 seats per week, respectively.
There are at least two-dozen such markets where one airline’s shutout is a merger’s gain.
Posted: February 11, 7:26am
U.S. antitrust regulators have become more activist in recent year clamping down on consolidation in most industries besides aviation. The last four major airline mergers in the past 8 years have all been cleared in 7 months or less. And although the American-US Airways merger is expected to clear, it will likely be the last major shakeup for the foreseeable future.
The last four major airline mergers in the US:
- MAY 2005 America West plans to buy US Airways out of bankruptcy in $1.5 billion deal; cleared in June by the Justice Department, creating fifth largest U.S. carrier by traffic
- APRIL 2008 Delta says it will acquire Northwest in $2.6 billion stock swap; cleared in October, forming world’s largest airline
- MAY 2010 United and Continental plan to combine in a $3 billion stock swap; cleared in August; vaults Delta to become largest carrier
- SEPTEMBER 2010 Southwest to buy AirTran for $1.4 billion; cleared in April 2011
- FEBRUARY 2013 American and US Airways near deal to become biggest carrier; clearance expected, but timing uncertain
Posted: February 11, 5:34am
On the eve (or close enough) of his likely appointment as CEO of the world’s largest airline, Doug Parker gets a profile at Bloomberg that highlights his days of being wooed by both American Airlines and one of its flight attendants whiul ehe was still an MBA student, to the failed mergers that have led him to this point.
“He learns from his past mistakes,” Gordon Bethune, the former CEO of Continental Airlines Inc., said in an interview. “He’s done this the right way, and it’s showing.”
It’s a good read.
Posted: February 11, 5:12am
The impending deal was reported to be finalized at board meetings on Saturday and today and then announced on Tuesday, but Bloomberg reports that we’re likely to see the merger announcement on Wednesday or Thursday:
The carriers had been heading last week toward board votes tomorrow and a possible announcement Feb. 12, said two of the people, who asked not to be identified because the talks are private. That time line will slip to later this week, they said.
Posted: February 10, 6:38am
After anticipating a formal announcement on the American-US Airways merger by Tuesday, Reuters reported late Saturday night that board meetings had been pushed to the middle of the week.
The companies had initially tried to schedule board meetings for Monday, the day that AMR’s creditors committee planned to convene, and had aimed to announce a deal as soon as Tuesday, sources told Reuters previously.
But AMR needed more time to finalize details and the boards of the two airlines are now not expected to gather until around Wednesday, the sources said.
Posted: February 9, 9:19am
It is sometimes easy to overlook the personal side of deal-making.
Skadden attorney Jack Butler, who led the AMR Corp. creditors’ committee, was a bulldog who broke the rules of the game, and prodded both Tom Horton and the pilot groups of both airlines into a deal.
That irked rival Harvey Miller, the 79-year-old Weil, Gotshal & Manges LLP bankruptcy lawyer representing American. During a court hearing in December 2011, Mr. Miller told the airline’s judge that he and the company felt “bushwhacked” by the unusual mission statement Mr. Butler filed and called parts of it “inflammatory” and “erroneous.” Mr. Butler didn’t respond to the concerns.
Posted: February 9, 8:10am
A merger between American and U.S. Airways would form the largest airline in the United States. As a result of the merger, an analysis by trade publication Airline Weekly found that these eight routes would become a monopoly, controlled entirely by the newly merged carrier:
- Charlotte – New York (LaGuardia)
- Dallas (DFW)-Charlotte
- Dallas (DFW)-Phoenix
- Dallas (DFW)-Philadelphia
- Washington (Reagan National)-Raleigh-Durham
- Washington (Reagan National)-Nashville
- The new airline would control most flights in three other markets:
- Chicago (O’Hare)-Philadelphia
- Chicago (O’Hare)-Phoenix
- Chicago (O’Hare)-Charlotte
Unless the government stepped in to ensure competition, fares would most likely rise between the city pairs. Fliers could technically still find cheaper fares if willing to booking a connecting flight on another airline.
Posted: February 9, 6:37am
It’s apparently down to dotting the i’s and crossing the t’s as the major issues in the merger of American Airlines and US Airways have been resolved. The airlines’ boards and the creditors’ committee will have plenty of reading to do as they peruse and vote on an agreement over the next couple of days.
“US Airways CEO Doug Parker would lead the new airline, presumably along with US Airways president Scott Kirby. And, lone ranger Tom Horton, the American Airlines CEO, who for months sought to steer the airline out of bankruptcy on its own, would have a role as non-executive chairman, possibly for a year or two.”
Posted: February 9, 4:05am
Neither American nor US Airways can afford to lose the latter’s operations center in Pittsburgh:
The $25 million facility, which opened in late 2008, is the airline’s nerve center, coordinating US Airways’ more than 3,000 flights a day systemwide, along with the crews who staff them.
Posted: February 9, 1:28am
Executive teams from both US Air and American will be busy this weekend signing off on all the final details before American’s board votes on Monday and an announcement is likely made on Tuesday.
It can’t hurt, of course, to point out once again why American’s creditors were so positive on the US Airways deal: everyone was on board — even the unions:
US Airways’ pilots union said today that members ratified interim contract terms if a merger occurs. The accord, approved with 75 percent of the vote, would bring US Airways’ pilot pay up to that at American and includes $1.6 billion in “economic improvements” over six years, said Gary Hummel, president of the US Airline Pilots Association.
The agreement earlier was approved by leaders at American’s Allied Pilots Association.
Posted: February 8, 3:25pm
The US Airline Pilots Association, which represents 5,200 US Airways pilots, has approved a provisional labor agreement to help smooth the path to a merger, the union says.
US Airways pilots have good reason for wanting the merger to go through as they’re looking at pay increases of up to 35 percent. The Wall Street Journal outlines terms of the interim labor understanding below:
According to the US Airways union, its members would be brought up to American pilot pay levels at the point when a U.S. Bankruptcy Court judge approved the merger as American’s bankruptcy-exit plan of reorganization.
…those terms would mean pay increases of 13% to 35% for US Airways aviators this year, future raises and improved employer contributions to their retirement plan…
Under the MOU, the new American pilot contract would serve as the base line for a new, joint contract to be negotiated to cover the two pilot groups. While those talks are under way, the aviators would continue to operate separately…
Posted: February 8, 1:56pm
American Air’s Twitter team took a break from dealing with stranded passengers across the U.S. and replying to comments about the airline’s rebranding to make one of the few comments it has so far about the likely merger:
We hope that, whatever happens, American’s social media team shows US Airways how to work Twitter and Facebook. According to SkiftSocial, the team from Tempe is pretty rubbish at using both. Read How do American Airlines and US Airways compare on social media? for a deeper dive into the airlines’ behaviors on Twitter and Facebook.
Posted: February 8, 12:56pm
Here’s the tale of the tape: The DOT has cited US Airways more frequently for trangressions, but American Airlines was subject to stiffer fines over the last few years, a Skift review has found.
American Eagle was subject to the largest penalty:
American Eagle was fined $900,000 in November 2011 for holding a total of 608 passengers across 15 flights for more than three hours on the tarmac on a particularly foggy day at Chicago O’Hare Airport. Passengers were held anywhere from 3 to 45 minutes over the 3-hour mark.
Posted: February 8, 11:33am
Worth revisiting: a white paper by the American Antitrust Institute (AAI) and Business Travel Coalition (BTC) from August last year, about the effects the AA-US merger will have on competition and other consumer issues, in light of previous historical airline mergers. Decidedly negative, of course.
The white paper, embedded below:
Posted: February 8, 11:23am
We heard something interesting, something often overlooked, in the Doug Parker (US Airways) versus Tom Horton (American Airlines) debate over which exec would lead the new and merged American Airlines. It’s the “it” factor. Someone, who knows both men, writes us:
“The successful CEO has to acquire, nurture and lead the management team through lots of minefields. I put a high weighting on the intangibles to identify the candidate most likely to succeed.
Doug is a more engaging kind of guy. I think he’s more likely to pull the pieces together and has stronger dimensions of boldness and creativity. The environment is so intense that people are more likely to follow and perform the best with a guy perceived as smart, tough and someoneone you’d like to hang with.
From a more basic/less esoteric perspective, I think the general population of AA would like a change based on what they’ve been through. Fairly natural reaction and I would think investors are aware of those feelings.
The personal leadership factor does sometimes get downplayed.
Posted: February 8, 11:18am
While the merger has a lot of benefits for the companies on the operational side, the deal wouldn’t solve a crucial problem for the merged airline: a lack of service to Asia, the world’s fastest-growing air market, according to WSJ.
American’s main rivals United and Delta are the two biggest carriers between the U.S. and Asia, accounting for nearly a third of the seats on those routes.. American accounts for less than 5% of those seats, and US Airways doesn’t fly to Asia at all. ”China is the flashing red light this merger doesn’t address,” said Bill Swelbar, an airline researcher at the Massachusetts Institute of Technology.
United and Delta also enjoy partnerships with big Chinese carriers, but the Oneworld airline alliance, in which American is expected to remain after the merger, lacks a member in mainland China.
Full story: AMR Stands to Gain Vast Route Network
Posted: February 8, 11:14am
When it comes to messy airline mergers, travelers need the facts, just the facts, or in this case, a Skift FAQ for consumers:
“It may not happen overnight, but as the merged airline consolidates some operations and routes around its hubs and focus cities, service to smaller cities will almost inevitably suffer, meaning you will have to find more connecting flights to get to your desired destinations. If you live in or need to travel on business to a smaller city, this isn’t going to be pretty.”
Posted: February 8, 9:29am
What do AMR’s stockholders have to look forward to? Diddly squat:
Posted: February 8, 7:54am
Now the regional airlines chime in: American Eagle’s unions are petitioning the bankruptcy court to block parent company American Airline’s deal to outsource some of their work — and presumably jobs — to Republic Airways. The latter airline just happens to do a lot of work for US Airways.
“Instead of re-gauging its fleet in line with the best interests of its employee groups, including TWU, American seeks to outsource work that could and should be done by American Eagle and its employees,” said the TWU, which represents mechanics and ground workers.
Posted: February 8, 6:26am
If this video from AZCentral.com is to be believed, Arizona loves its hometown airline US Airways:
Posted: February 8, 5:49am
Our friends at Quartz have been following the merger story closely this week. Last night Tim Fernholz wrote about the back-room labor deals US Air’s Doug Parker was able to pull off with American’s largest unions. The unions have despised AA’s management for over a decade, so this was easier than you imagine, but still fascinating. This quote captures it all:
“Within two weeks were able to negotiate what we couldn’t do in six years with American Airlines, and that was a contract,” Tom Hoban, an American pilot who is a spokesperson for the Allied Pilots Association, says.
Posted: February 7, 7:34pm
“Butler, a 56-year-old bankruptcy lawyer, was instrumental in getting American Airlines to the negotiating table with US Airways by prodding and coaxing Tom Horton, AMR’s CEO, and his advisers. He also has pestered American’s unions and US Airways pilots and executives for over a year. As the lead lawyer for the creditors committee watching over American’s bankruptcy case, he begged to differ when the airline said it planned to emerge from Chapter 11 before considering mergers.
Butler works at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Here he is, below, in a 2011 video clip talking about a bankruptcy plan for any large company.
Posted: February 7, 6:47pm
What effect would the merger have on Tempe, Arizona, the home town of US Airways? Doesn’t look that good, as American’s HQs Dallas would likely become the hub of the merged company.
The merger would mean the headquarters in Tempe would shift to Dallas and at least 2,000 corporate jobs would be lost. Thousands more “indirect” jobs in the Valley would also be lost as businesses that support the airline would also suffer…An economic analysis of the impact to the Valley indicates a $86 million to $345 million loss in wages to the Valley.
Posted: February 7, 3:13pm
Tuesday is shaping up to be the day that we’ve all been waiting for.
Reuters reports that AMR creditors plan to meet on Monday to potentially cast their final vote on an American-US Airways merger. People familiar with the matter say there is a desire to seal the deal before February 15
Posted: February 7, 3:03pm
In the video below, the Wall Street Journal‘s Mike Spector points out one big difference between this merger and others. “The different wrinkle is that American will do this while still in bankruptcy,” Spector says. “It wasn’t something they wanted to do but they were worn down by their creditors.”
Posted: February 7, 2:23pm
Reuters tweeted on Thursday evening that Monday, February 11, will likely be the day that the future of an American-US Airways merger is finally decided.
Posted: February 7, 2:01pm
An American-US Airways merger would result in the largest airline in the world, the implications of which have not eluded US Airways’ shareholders. The airline’s share price has more than tripled since American filed for bankruptcy.
It is too late to profit from the likely US Airways-American Airlines merger by buying US Airways stock. The additional upside is minimal, whereas the downside is substantial if the merger falls through (which is still a real possibility).
Even if the merger is approved by all of the relevant parties, integration costs could be $3 billion or more, based on United’s experience, and the expected revenue benefits may not materialize. The best thing to do now is to sit tight on the sidelines.
Posted: February 7, 1:55pm
Yahoo! Finance columnist Mike Santoli appeared on ABC News this morning to talk through the merger. In his estimation (at the 3:21 mark), we’ll soon see discount airlines emerge to fill in holes left by a merged American and US Air.
Posted: February 7, 10:05am
Here’s what CNBC has to say about the merger:
Posted: February 7, 10:01am
FareCompare’s Rick Seaney has a solid Q&A over at his site about loyalty points, naming, timelines, and, most airfare prices:
Most air travel pundits rightly note the minimal overlap between the American and US Airway route systems but they also point to this as a reason why no one should get too concerned about higher ticket prices. I disagree. A merger guarantees the two airlines will never compete in the future and competition is the main driver of cheaper airline ticket prices.
There’s a podcast available at his site and over at iTunes, too.
Posted: February 7, 4:26am
Of the many stories today about AA/US Air, Bloomberg skips the re-write and gets to a bit of the meat, like the equity split between the combined airlines:
AMR has urged that creditors get 80 percent of the equity versus 20 percent for US Airways shareholders, while US Airways favors a 70 percent to 30 percent division, people familiar with the matter have said.
Posted: February 6, 6:35pm
The merger announcement is coming as soon as Tuesday morning next week, according to four sources the local NBC station in Dallas has spoken to. According to NBC 5 in Dallas-Ft. Worth:
Under the scenario, now in its final stages, American Airlines CEO Tom Horton would accept a multimillion dollar payout to exit the company or take an honorary role on the board of directors in which he has no real power, the sources said.
Posted: February 6, 5:56pm
According to the Wall Street Journal, the merger is getting to the critical stage, where it will either sail through or blow up. Will Tom Horton acquiesce and give up the reins? In all likelihood he will have to.
“Significant points of the deal, including how to split ownership of the airline and how to arrange board seats and management ranks, remain unresolved. The boards of both airlines haven’t yet convened to consider the deal, although American representatives on Wednesday discussed whether to schedule such a meeting, said a person close to the matter.”
The WSJ goes on to point out the milestone that the merger will represent:
The combination would represent the final step in a consolidation process that has stabilized the U.S. airline industry by taking seats out of the skies and giving carriers more leeway to raise fares, which are 16% lower than they were in 2000 on an inflation-adjusted basis domestically. The tie-up would leave American-US Airways and three other major carriers dominating the industry in the U.S.—all of which have done their own mergers in the past six years: United Continental, Delta Air Lines Inc., and Southwest Airlines.
Posted: February 6, 5:49pm
Doug Parker has the inside track to become the new American Airlines CEO in a landslide if you consider his track record in turning around US Airways into a scrappy, high-performing, and profitable airline. While neither Parker or current American CEO Tom Horton have made many friends among the ranks of pilots, Parker is considered by many to be the lesser evil.
Darryl Jenkins, an airline analyst who knows both Parker and Horton, credits Parker with straightening out AmericaWest, where he took on the CEO role in September 2001, and for successfully leading its acquisition of, and merger with, US Airways in 2005.
“Parker was good at changing operations, he brought in good people, and they cleaned up their pricing,” Jenkins says of Parker’s tenure at AmericaWest. “AmericaWest was always a dog with fleas until Parker cleaned it up.”
Posted: February 6, 5:19pm
There is now news that an announcement of an American and US Airways merger could come as soon as next week, although we’re betting that it’s closer to just days away.
So what does an American-US Airways merger mean for fliers? The Wall Street Journal addresses fliers’ biggest concerns:
- Travelers won’t see the difference for some time as it will take months for the merger to gain approval from the U.S. Bankruptcy Judge overseeing AMR’s reorganization and the U.S. Department of Justice.
- Airfares will likely increase in the long-term as consolidation in the industry provides airlines more pricing power.
- Many routes and hubs aren’t expected to get cut. This merger is more about catching up to the competition that consolidating operations.
- Based on previous mergers, fliers will retain their miles, although changes to frequent fliers programs could impact passengers down the road.
Posted: February 6, 8:06am
US Airways is off to a good start in 2013; much better, indeed, than takeover target American Airlines. FlightStats Inc., looked at load factor, on-time arrivals, excessively late flights, and cancelled flights for the month of January, and in every case, US Airways was in third or fourth place and American was dead last. On-time arrival numbers looked like this:
- Delta Air Lines: 87.18 percent
- Southwest Airlines: 84.85 percent
- US Airways: 83.28 percent
- United Airlines: 82.28 percent
- American Airlines: 79.99 percent
Posted: February 6, 7:29am
Although the American Airlines’ rebranding triggered a slew of strong emotions throughout the aviation community, US Airways has agreed to adopt the new design in the event of a merger. However much you might hate the striped tail, it is probably much better than would have happened if designers attempted to combine American’s stripes with the color blocking on US Airways’ livery.
Jonny Clark, a pilot and airline brand consultant who has worked with more than 50 airlines, points out what went wrong when United and Continental attempted to integrate both brands in a redesign:
When two airlines merge, the most loved brand usually survives. Instead, when United and Continental joined forces in 2011, they decided to blend corporate identities, with disappointing results. Most designers agree this merger has created a weak brand that is easily forgettable. The airline has suffered from what appears to be design by consensus.
Posted: February 6, 4:49am
Merger or not, American Airlines is getting a new look. We broke the story when we revealed the designs prior to AA’s official announcement (sure, it was just an hour ahead but we still got there first), and we’ve kept up with the debate since.
Here’s an incredibly in-depth look at the new 777-300ER’s maiden flight from Texas to Sao Paulo, as well as a history of the airline’s looks.
This inaugural, flight 963, from Dallas/Ft. Worth to São Paulo, Brazil in the author’s view is one of the most significant in the airline industry in years because it is about something much bigger than just the launch of a new airliner, it’s about the re-birth of a proud American institution that happens to bear the name of our country – American Airlines.
Posted: February 5, 7:58am
Jonathan Yates, who’s part of the Motley Fool’s Blog Network, writes at the finance site that the likely merger is a bad deal for US Airways.
After pointing out that the airline just had its best quarter ever, Yates argues:
Passenger traffic increased by 3.8%, and the load factor, the number of seats filled, rose by 1.4%. Passenger revenue per seat mile also jumped by 2.2%. About these results, the Chief Executive Officer of US Airways, Doug Parker, stated, “We couldn’t be happier with the performance of US Airways in 2012.”
Wall Street agrees with Parker, as the share price has soared 133.54% in the past year. Why risk such a great performance with a merger when things are going so well with the present way of doing business?
For one, US Airways will risk it because big mergers are what legacy carriers do these days. There’s an expectation that US Air won’t continue to have stellar quarters if they’re not big enough, even if recent earnings reports from Southwest and Allegiant provide a solid argument that smallish isn’t necessarily bad.
Posted: February 5, 6:25am
Why doesn’t Chapter 11 lead to more innovation? New York Times‘ Dealbook looks at the recent history of airline re-organizations today, using the impending American-US Air deal as an opportunity to muse on why the bankruptcy process hasn’t produced an innovative airline like Southwest or JetBlue.
Airlines never seem to use Chapter 11 to consider a new business model. Among the large domestic, full-service airlines, we have Delta, United, US Airways and American. I have flown most of them in the last few years, and what seems to distinguish American from the rest is the age of the planes.
Posted: February 4, 8:14am
If you think the United-Continental airlines merger was — ahem, is — a mess, then get ready for the heavy lifting of an American Airlines-US Airways merger, if it indeed comes to be.
The integration of the two airlines, with all of the labor, technological and logistical issues to sort out, will undoubtedly take years, and the stakes are extremely high, as United-Continental’s bumpy track record in their merger highlights.
Posted: February 4, 6:25am
Could Boeing’s 777-300ER give American Airlines the edge it needs to survive either on its own or in conjunction with US Airways? CNET points out the power of the twine-engine plane and what it could mean for AA:
It has become the world’s most-successful twin-engine airplane, but until now, no U.S. carrier has flown Boeing’s 777-300ER. But with the launch on Thursday of its Dallas to Sao Paolo, Brazil, flight, American Airlines has broken new ground, and is now depending on its fledgling 777-300ER fleet to re-earn its once legendary wings. And make it a lot of money.
One of the best things it has going for it is that it is not a Dreamliner.
Posted: February 2, 7:33am
Ely Portillo writing at the Charlotte Observer describes about the likely merger’s effect on the US Airways hub in Charlotte, as well as the battle of executive wills taking place:
“I like to joke the three most important issues in airline mergers are what are we going to call it, where’s it going to be located, and who’s going to run it,” said Bob Mann, head of aviation consulting firm R.W. Mann & Co. The new carrier is set to be called American Airlines and be headquartered in Fort Worth, Texas. That leaves the leadership question. “I think we’re down to the real ego issue,” Mann said.
Posted: February 1, 7:57pm
The latest bump in American Airlines’ business isn’t a power play by pilots or more creditors angry with Tom Horton, it’s Broadway and television actress Kristin Chenoweth. The actress ended up in an argument with American gate agent who wouldn’t allow her on board with her dog. The actress considers the pup an “emotional support animal,” a classification that’s used loosely to allow people to bring pets where they wouldn’t otherwise be allowed.
American released a statement: “We have been in touch with Ms. Chenoweth to offer our apologies for the misunderstanding. We refunded the ($125) cabin pet charge as soon as we realized the mistake. We hope she will consider flying American again in the future.”
Posted: February 1, 6:01pm
From Reuters’ Legal Twitter feed:
Posted: February 1, 5:38am
From American Airlines’ hometown, the Ft. Worth Star-Telegram‘s Andrea Ahles reports that analysts are pushing for US Airways’ Doug Parker to lead the combined airline rather than AA’s Tom Horton.
“We continue to believe that the US Airways team has clearly demonstrated an ability to handle a complex merger and create value for shareholders and expect it to do it again in its potential merger with AMR,” said Bob McAdoo, an analyst at Imperial Capital.
Posted: January 30, 10:48am
Brett Snyder, aka Cranky Flier, offered this perspective on who needs what out of the merger during a Q&A with Vinay Bhaskara over at Bangalore Aviation.
It might be true that neither American nor US Airways needs to merge, but I would say that US Airways needs it less.
US Airways has found a profitable niche over the last few years. It has been consistently profitable with a lower revenue base because it has been able to achieve costs to match. But that is really what the airline is — a niche player. It can help to complement other larger airlines, as it does in Star Alliance today, but it is not a world leader.
US Airways and American Airlines are hammering out the details of a potential merger, leaving employees, travelers and Charlotte residents waiting to see whether the companies combine. Many analysts believe a deal is fast approaching. “What we’re seeing emerge in the public realm is telling me this is real, and it’s going to occur sooner [...]
Investors will get more value from a combination of American Airlines and US Airways if US Airways Chief Executive Doug Parker is at the helm, Wall Street analysts said Wednesday. Analysts pointed to the Arizona-based airline’s strong fourth-quarter financial results as one reason why Parker — not American CEO Tom Horton — should control the [...]
AMR CEO Tom Horton is in talks about becoming board chairman if American Airlines parent merges with US Airways, one of a number of signs both companies are nearing a deal that could create the world’s largest airline by traffic….He could become a vice chairman, senior adviser, take on another role or choose to retire, [...]
Last week we launched our first data dashboard in beta, SkiftSocial, read more about the launch here, and what it means for social media monitoring in the travel industry. Customer service representatives at airlines had no idea what was coming for them the day that Twitter launched. The social media platform has completely changed the dynamics [...]
A group of AMR Corp. bondholders with about $1.5 billion in unsecured debt is backing a merger in bankruptcy with US Airways Group Inc. and pushing for a deal by Feb. 15, people familiar with the matter said. The bondholders coalesced behind the idea after reviewing confidential data from AMR’s American Airlines and US Airways, [...]
American Airlines and American Eagle employees inspected AA’s redesigned livery outside LaGuardia concourse D gate 5 today as the airline rolled in a 737-800, the first aircraft that’s outfitted with the new look of the “new American.” Even before I got to the gate, an American Airlines agent behind the ticket counter rolled her eyes [...]
US Airways Group Inc and American Airlines parent AMR Corp are in the final stages of negotiating a merger, with valuation and management structure being the two major sticking points left to resolve, four people familiar with the matter said. The two airlines, as well as AMR’s creditors and its bondholders, have focused their efforts [...]
American Airlines’ rebranding of its logo and livery stirred up a flurry of discussion about fonts, colors, and tail wings. The airline is resolutely moving ahead and has partnered with a design firm, KaufmanFranco, to create new employee uniforms that are in line with the airline’s brand-wide design overhaul. This is the first refresh to the [...]
American Airlines signed a 12-year agreement for Republic Airways Holdings Inc. to operate 76-seat regional jets, the first such agreement in the AMR Corp. unit’s history. Fifty-three Embraer SA E-175 jets operated by Republic will be phased into service at two to three planes a month beginning in mid-2013 through the first quarter of 2015, [...]
One’s first thought after seeing a new airline ad probably shouldn’t be the image of one of the airline’s jets crashing into a marshland shortly after takeoff. But after watching American Airlines’ new spot that’s exactly where this viewer’s head was. For that, you can thank American’s choice Jon Hamm, star of “Mad Men,” to [...]