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US Airways and American Airlines to merge, creating world's largest carrier
Tempe-based US Airways and bankrupt American Airlines have officially announced their intention to merge. The new company will keep the American Airlines name and be based out of Dallas-Fort Worth.
Current American CEO Tom Horton said at a press conference that while there will be job losses, the two companies complement one another.
“We have only 12 overlapping routes out of some 900 hundred or some that we fly together," Horton said. "We expect very little redundancy at all in the operations, so it’s really about putting together the management teams and the efficiencies that can be created there. So there will be some reductions on the management front.”
The companies will remain competitors until the deal is officially closed, which US Airways CEO Doug Parker said should be in the third quarter of this year. Parker will take over as CEO of the new American Airlines. Full integration of the two companies into a new airline could take a year or more. Many of the details of the merger were already known. US Airways shareholders will own about 30 percent of the new company, the bankrupt American’s creditors will get about 70 percent.
Phoenix Mayor Greg Stanton says while he’s disappointed to see US Airways headquarters leave the Valley, he’s glad the new airline plans to maintain Sky Harbor as a hub.
“We have a long and proud history together with our hometown airline. And I’m not naive. Yes, it’s disappointing to lose a corporate headquarters. But that corporation has also committed that their philanthropic giving, their corporate giving to the nonprofits in this community is going to be maintained," Stanton said.
Stanton says he hopes the new airline will boost the number of international flights coming in and out of Sky Harbor.
Robert Mittelstaedt is the Dean of ASU’s WP Carey School of Business. He said the merged company may adjust its service and ticket prices.
“If you’ve got some route somewhere where both of them are flying there, and they suddenly are flying one flight a day instead of two, you would see the price go up," Mittelstaedt said. "On the other hand, that’s the kind of thing that the Department of Justice is going to look at and decide whether there’s certain places where they have too much control over a market, and they may have to sell a route to some other airline.”
But Mittelstaedt said on the whole, ticket prices have gone up recently largely due to fuel prices and cuts to the number of flights.
Updated on 2/14/2013 at 3:09 p.m.