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February 13, 2013

AMR board approves merger with US Airways, announcement expected Thursday

The deal is finally done.

On Wednesday, the board of directors for both AMR and US Airways approved a definitive agreement to merge the two carriers, sources close to the deal said.

An announcement is scheduled for Thursday morning at Dallas/Fort Worth airport at American Airlines’ Admirals Club, the sources said.

The merger will create the largest airline in the U.S., bumping United Continental out of the top spot. The merged company will have combined revenues of $38.7 billion, 1,500 aircraft and close to 100,000 employees.

The deal will need to be approved by the bankruptcy judge and by federal regulators before American’s parent company, AMR, can exit from Chapter 11 bankruptcy protection.

AMR’s board met in New York and voted unanimously to approve the merger. Sources said a bankruptcy filing will be made on Thursday regarding the deal.

Details of the merger have not been released although sources said that AMR chief executive Tom Horton will become non-executive chairman of the new carrier until its first sharheolder meeting which likely be in mid-2014. US Airways chief executive Doug Parker will become the chief executive of the merged airline.

The deal is likely to include a 72 percent equity stake for AMR creditors while US Airways shareholders will receive 28 percent of the equity in the new company, sources said, adding that AMR common shareholders will get a percentage of AMR’s equity portion of the merger.

According to the Wall Street Journal, the board of the new company will have 12 directors, with five appointed by American’s creditors, three appointed by American and four appointed by US Airways.

US Airways has been pushing for a merger since last spring, winning the support of American’s unions and creditors.

Meetings have been going on for weeks as the executives at both companies, along with American’s unsecured creditors committee and an ad hoc bondholder group, tried to reach a deal before the Feb. 15 expiration of a nondisclosure agreement with bondholders.

AMR had previously asked the court to extend its deadline until late April to submit a reorganization plan which suggested that talks could have stretched past this week.

With the merger, American will get more market share on the East Coast, where it has lost business in recent years to carriers like JetBlue. US Airways’ hubs in Charlotte and Philadelphia will also bolster American’s north-south traffic on the East Coast.

For US Airways, the merger gives it access to more international routes and partners through the Oneworld alliance. US Airways is currently a member of the Star Alliance but does not have the full benefits where United has better joint ventures with international partners.

-Andrea Ahles

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Comments

underdog

Now you have even more disgruntle workers. Two crappy airlines one big mess

Steven B

You know, I'm not a Corporate Giant, but wasn't it a tad foolish to spend all that money re-designing your logo and re-painting your aircraft when you're about to merge?

Or is it me?
.

whitey

no steven its not you. the hot dog stand logo will probably remain.hopefully doug parker will stop the painting of the planes real fast.thank god that sob Horton will not be around for long.now lets just hope the board of directors do not include roger staubuck or any of the former crooks on the board that American had.who knows maybe doug will appoint mr Crandall as president while doug will be ceo. waiting and praying for that to happen. yea mr Crandall its time to take a drive to hdg and play publishers clearing house. then its off to the down line stations to fire thw worthless gm,s they have!

RL

Nice to see the CEO on his way out. Hopefully Doug Parker will rid the viral management team and let Karma do the rest!

Teresa

I'm confident that in a couple of years the union groups will be complaining about whoever is running the airline.

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