American, US Airways merge in $11 billion deal

Windsor Genova – Fourth Estate Cooperative Contributor

New York, NY, United States (4E) – American Airlines and US Airways announced their merger on Thursday. The deal worth $11 billion will create the largest airline in the U.S. in terms of passenger traffic after approval by federal regulators and the bankruptcy court.

AMR Corp., owner of the bankrupt third-largest U.S. airline, will also get the approval of the deal from the U.S. Bankruptcy Court in Manhattan, according to its lawyer, Stephen Karotkin.

The combined airlines, which will use the American name, will become the dominant carrier ahead of Delta, United Continental, Southwest and other airlines by accounting for 24 percent of the U.S. air passenger traffic last year, according to CNN Money.

The two airlines will combine operations and systems to have 6,700 daily flights to 336 destinations in 56 countries, including eight non-stop routes.

In the announcement, the two airlines said they expect to save and earn more than $1 billion in revenue by 2015. US Airways CEO Doug Parker will head the new airline company with AMR CEO Tom Horton serving in a non-executive chairman capacity.

Shareholders of US Airways, the buying party, will receive a share in the new company for every share they hold, but only up to a maximum 28 percent as AMR creditors will take the rest. Creditors to which AMR Corp. owes $1.2 billion and American’s labor unions are backing the deal that caps US Airways rise as the No. 1 U.S. airline from just No. 5 in 2005.

US Airways bought then bankrupt American West that year. US Airways tried to buy Delta for $8 billion in 2006 but failed. The purchase of AMR Corp., which declared bankruptcy in November 2011, will be its second successful takeover of a rival airline.

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