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American, US Airways reportedly to merge, form largest U.S. airline

A US Airways jet takes flight as an American Airlines jet is prepped for takeoff at Sky Harbor International Airport in Phoenix in 2008. The merger of US Airways and American Airlines would create the largest airline in the United States.

Associated Press (2008)

A US Airways jet takes flight as an American Airlines jet is prepped for takeoff at Sky Harbor International Airport in Phoenix in 2008. The merger of US Airways and American Airlines would create the largest airline in the United States.

Ending a yearlong courtship by US Airways, American Airlines agreed Wednesday to merge with the smaller carrier, paving the way for the creation of the nation's largest airline, which will fly under the American Airlines name.

The boards of both companies met separately to approve the combination, according to two people with knowledge of the vote who asked not to be identified by the New York Times. A merger would bolster American's domestic footprint, strengthen its presence in the Northeast and give it a bigger network to attract business travelers and corporate accounts.

The merger, the details of which will be announced this morning, would create a rival with the size and breadth to compete against United Airlines and Delta Air Lines, which have both grown through mergers of their own in recent years and are currently the biggest.

If the airlines retain their current presence after the merger, the combined airline would become Tampa International Airport's second-largest carrier after Southwest Airlines, said airport spokeswoman Janet Zink. It would have 38 flights a day out of TIA, accounting for about 18 percent of the daily flights.

"The two airlines have no overlapping routes," Zink said.

While United and Delta went through bankruptcies and mergers over the past decade, American has been steadily losing ground while racking up more than $12 billion in losses since 2001. It was the last major airline to seek court protection to restructure its business when it filed for bankruptcy in November 2011.

The wave of big mergers in the industry has created healthier and more profitable airlines that are now better able to invest in new planes and products, including Wi-Fi, individual entertainment screens and more comfortable seats for business passengers.

But some consumer advocates said they worried that reducing the number of airlines would lead to higher fares over the long run and allow airlines to increase revenue by imposing new or higher fees.

The deal, which was finalized in recent days, could be formalized as American exits bankruptcy. Douglas Parker, the chairman and chief executive of US Airways, will take over as American's new chief executive. Thomas Horton, American's current chairman and chief executive, will be chairman, although his tenure could be limited.

The merger still needs to pass several steps. It must be approved by American's bankruptcy judge in New York. US Airways shareholders, who will also have to approve the deal, would hold 28 percent of the combined carrier.

In addition, it will be reviewed by the Department of Justice's antitrust division, although analysts expect the deal to clear.

If approved, the nation's top four airlines — American, United, Delta and Southwest Airlines — would control nearly 70 percent of the domestic market.

The merged American Airlines will still be based in Fort Worth, Texas, and have a combined 94,000 employees, 950 planes, 6,500 daily flights, eight major hubs and total annual sales of nearly $39 billion.

Times staff writer Jamal Thalji contributed to this report.

American, US Airways reportedly to merge, form largest U.S. airline 02/13/13 [Last modified: Wednesday, February 13, 2013 10:29pm]
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