American Airlines (AA) parent AMR Corp and US Airways Group have officially announced their merger and the resulting creation of the world’s largest airline.
The new group, which will retain the AA name, exceeds Chicago-based United Airlines. It will have a global network with nearly 6,700 daily flights to more than 330 destinations in more than 50 countries and more than 100,000 employees worldwide. The company has a firm order for 600 new aircraft.
Confirmation of the deal follows a go-ahead from the Justice Department, which last month approved the US$11bn merger after initially raising anti-trust concerns. These were addressed when the two companies gave up gate slots and takeoffs at major US airports including Washington DC’s Reagan national, New York’s LaGuardia, Boston’s Logan and LAX in Los Angeles.
The approval came shortly after the US supreme court rejected a bid by consumer groups and travel agents to halt the merger on the basis that it would cause ‘irreparable injury’ to the domestic airline industry, drive up prices and damage service.
AA and US Airways retorted that the merger was vital as the two companies seek to cut their costs. AA went into bankruptcy in 2011, the seventh US carrier to go bust since 2000. The deal brings the company back out of bankruptcy. Since 2005, mergers have reduced the US’s major airlines from nine to four. American, United, Delta and Southwest now control more than 80% of the US market.
The latest union is seen as marking an end to a wave of major-carrier consolidation that has helped put US airlines on more sound financial footing. The merged airline will now begin the tricky process of integrating their operations, a task which has proved problematic in other mergers such as that between United and Continental Airlines in 2010.
“Our people, our customers and the communities we serve around the world have been anticipating the arrival of the new American,” said Doug Parker, AA’s chief executive officer (CEO).
“We are taking the best of both US Airways and American Airlines to create a formidable competitor, better positioned to deliver for all of our stakeholders. We look forward to integrating our companies quickly and efficiently so the significant benefits of the merger can be realised.”
The new company will merge its air miles programmes into AA’s Oneworld alliance. US Airways will exit Star Alliance on 30 March 2014 and will enter Oneworld on 31 March 2014.
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