New American Airlines Emerges as Deal Closes

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us airways american airlines merger aal
Susan Walsh/AP
By DAVID KOENIG

FORT WORTH, Texas -- American Airlines emerged from bankruptcy protection and US Airways culminated its long pursuit of a merger partner as the two completed their deal Monday to create the world's biggest airline.

It's the latest in a series of mergers that will leave four airlines controlling more than 80 percent of the U.S. air-travel market. With less competition, the airlines have successfully limited the number of seats, boosting prices and returning to profitability.

American's old parent, AMR Corp., is gone, replaced by the new American Airlines Group Inc. CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked on stage by executives and labor leaders of both airlines and in front of a crowd of cheering employees.

"Our goal here is to go and restore American Airlines to its position as the greatest airline in the world," Parker said. The largest airline as recently as 2008, American struggled through a decade of huge losses and fell behind United and Delta in size.

For passengers, the merger won't mean many immediate changes. Whether the deal leads to higher ticket prices, the issue at the heart of legal challenges from the government and consumer groups, remains to be seen.

Parker dismissed the notion that fewer airlines will lead to higher airfares because, he said, the new American plans to keep all the service currently offered by American and US Airways.

"Airline prices are like prices in other businesses -- they track with supply and demand, and we're not reducing any of the supply,"
he said in an interview with The Associated Press.

Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other's flights, increasing the destinations available to customers of both.

It will take about two years to combine American's fleet and workforce with those of US Airways, Parker said. US Airways will join Continental, Northwest and other airlines that now exist only in the memories of employees and longtime travelers.

Airline mergers are notoriously troublesome. United has been plagued by computer-network problems since combining with Continental, leading to outages and flight delays. Airlines' technology systems handle everything from passenger information to weight and balance calculations on every flight. Then there is the difficulty in merging two sets of employees who, in this case, are represented by different unions. US Airways has been down that path before -- it still hasn't fully integrated pilot crews since its merger with America West, and that deal closed in 2005.

Unions at American received Parker like a conquering hero. Their support for a merger led by US Airways executives was a turning point when AMR CEO Tom Horton still hoped to keep his airline independent. For their efforts, the unions won stock in the new company.

On Monday, Parker made symbolic moves to extend a hand to labor -- painting over parking spaces once reserved for executives, and asking Nasdaq to inscribe a commemorative opening bell to the employees instead of to him. Still, the honeymoon could be a short one.

"His greatest challenge is keeping positive sentiment on his side," said Vicki Bryan, an analyst with bond-research firm Gimme Credit. "He's at the peak of 'happy' right now. He's got to keep the unions happy; he's got to keep the computers running; he's got to keep the balloon in the air."

In morning trading, new shares of American Airlines Group -- traded under ticker symbol AAL -- were up 45 cents to $24.55.


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kpamesa

Oh my - why all the "concern"? USAirways is just being re-absorbed by the carrier that originally spun it off. In truth, American was a spin-off from Pan-American World Airways (aka PanAm). Bottom line - individually USAir and American did NOT overlap on all that many routes, so there won't be any major disruption of service - ergo, rates should not be adversely affected.

December 10 2013 at 1:49 AM Report abuse rate up rate down Reply
OH NOBLE ONE!!!

Does anyone remember Allegheny Airlines? I flew on their planes in the 60\'s, USAir in the 70\'s, USAirways in the 90s, and American in the 2000\'s. Lots of changes in the industry for sure!

December 10 2013 at 12:59 AM Report abuse rate up rate down Reply
jjr526

That leaves only United as a star alliance in the US as USAir/American goes one world now. The America West /USAir merger never really seemed complete other than the AWA painted planes are gone.

December 10 2013 at 12:23 AM Report abuse rate up rate down Reply
classof68gto

Less competition will mean higher fares. It is like back in the old days when there were several brands of gasoline. They either merged with other companies or went out of business and gas prices rose.

December 10 2013 at 12:09 AM Report abuse rate up rate down Reply
hmenglish1

the union is the best thing to happen in this country , and also the worst , it protects
the sob that doesn't work , i know first hand , been there and saw it ,

December 09 2013 at 11:11 PM Report abuse rate up rate down Reply
hmenglish1

damn shame a union profits from shares in a deal like this ,

December 09 2013 at 11:07 PM Report abuse rate up rate down Reply
1 reply to hmenglish1's comment
gwhjelm

I am very happy, that you are unhappy about the unions. We need a hundred more unions to put some sense into the work force. THis deal is nothing more than a ripoff of the taxpayer's of this country. How many pension plans a decent wages went down the drain to fuel your love for huge corporate profits. If I can haave it my way, American Airlines can go broke, and the government should give them nothing. This is nothing more than corporate welfare at the taxpayers expense. Viva unions!

December 10 2013 at 1:59 AM Report abuse rate up rate down Reply
Chester DUDE

Do all you whiney anti capitalists who really think 25% of US air travel market is a monopoly you better go back and review economics 103.

December 09 2013 at 10:42 PM Report abuse rate up rate down Reply
coffeegirl4ever

I USED TO TRAVEL TO BERIA KY - WHAT A NIGHTMARE !!! WILL IT EVER GET BETTER??EVERY TRIP I TOOK OUT THERE WAS AWFUL

December 09 2013 at 10:42 PM Report abuse -1 rate up rate down Reply
slop9124

This will lead to higher fares as less competition. You may see service down on certain routes as one airline won't waste money flying the same amount of flights as were available before the merger. Once they get all together you will find changes that will affect all travelers in some way. I saw the beginning of the downfall of Greyhound Bus Lines when they bought The Continental Trailways System. Each busline had many routes that wound up at the same destination but used different routes to get there. After they merged together the duplication to the same destination eventually was cut down to about half the number of trips meaning less buses to those inbetween towns and less driver jobs thus creating friction between the drivers of the two former companies. This merger went on to created a five year labor dispute and the loss of business as charter bus customers went to other smaller companies who would prosper as a result. This led to the demise of the once internationally well know Greyhound Lines as the number one ground transpertation in the world. So wait and see what happens when you only have four major airlines.

December 09 2013 at 10:15 PM Report abuse rate up rate down Reply
Denise

We are so screwed with this merger. I might as well learn to flap my arms and learn to fly. At least I have a chance of getting a flight.

December 09 2013 at 10:14 PM Report abuse +2 rate up rate down Reply
1 reply to Denise's comment
Chester DUDE

I'm not, I bought 2,000 American Airlines shares when it was 36 cents a share. its now about 12 bucks.

December 09 2013 at 10:40 PM Report abuse rate up rate down Reply
1 reply to Chester DUDE's comment
forvr22

Obviously you have not flown lately.

December 09 2013 at 11:22 PM Report abuse rate up rate down