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December 08, 2013

Creating the new American, executives face integration challenges

New American 8For Doug Parker, who spent nearly two years fighting for a merger between American Airlines and US Airways, it is time to celebrate.

On Monday morning, Parker will host an employee rally at a hangar at Dallas/Fort Worth Airport where he will ring the bell to open trading on the Nasdaq stock exchange as the newly merged American Airlines begins its first day of trading.

Shortly afterward, American’s new chief executive officer will begin the long, hard work of making the world’s largest airline run smoothly with 100,000 employees and 1,500 aircraft.

“All those kinds of things that customers expect, we have to get them done and get them done quickly,” Parker, the longtime leader at US Airways, said in an interview last week.

With the merger, American once again moves past United Continental and Delta Air Lines to reclaim the No. 1 spot in the industry.

However, becoming the biggest also brings huge integration challenges. Parker and his new executive team must figure out how to combine computer systems, internal policies and a unionized workforce. And they must bring the airlines together without interrupting 6,500 daily flights and with minimal impact on customers.

The process could last another two years, with American and US Airways flight schedules to continue until the US Airways name eventually goes away.

“The challenge for 2014 will be to deliver on what we told everyone that we would,” said Scott Kirby, American’s new president. “We really just need to deliver on all the promises that we made.”

That includes obtaining the $1 billion in merger synergies that Wall Street is expecting and working on new contracts with labor groups.

Industry analysts say they hope the new American has learned from problems that have plagued other airline mergers. In 2012, the newly merged United Continental saw its passenger reservation system go down for days during the integration process, delaying flights for hours and stranding passengers.

“The new leadership for American will need to be good listeners. They will need to ask the right questions,” said Hudson Crossing airline analyst Henry Harteveldt. “American has a terrific opportunity to proceed and win, but they have to want to win. They have to do what’s needed.”

Click here to read the full article that appeared in Sunday's Star-Telegram.

-Andrea Ahles

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