February 14. 2013 11:30AM

American Airlines and US Airways to merge

  
American Airlines parent company AMR Corp. and US Airways Group Inc. plan to merge, forming the world’s largest airline, the companies announced today.


The new company would keep the American name and brand, and its home base in Fort Worth, Texas. Its combined equity value would be about $11 billion.

The all-stock transaction would allot 72 percent of the company to AMR Corp. creditors and the rest to US Airways shareholders. AMR filed for bankruptcy protection in November 2011.

Doug Parker, current US Airways chief executive officer, would be the combined company’s CEO. Tom Horton, AMR chairman, president and CEO, would serve as nonexecutive board chairman until the completion of its first annual meeting of shareholders.

The deal is subject to approval by the judge overseeing AMR’s bankruptcy case, antitrust regulators and other agencies.

The combined airline plans to maintain service to all cities and keep all its hubs. It has ordered more than 600 new mainline aircraft for its fleet.

American and US Airways each have two gates at General Mitchell International Airport in Milwaukee. There are six other airlines with gates in Milwaukee.

American currently flies to Chicago-O’Hare and Dallas-Fort Worth from Mitchell. US Airways flies from Milwaukee to Charlotte, Philadelphia and Phoenix, said Mitchell spokeswoman Pat Rowe.

“With this new merger, there will be four airlines that carry about 85 percent of domestic passengers in the U.S. and Mitchell is served by all four of those carriers plus Air Canada and Frontier,” Rowe said.

Mitchell currently has flights to 37 cities nonstop, including seasonal cities served by charter flights. The airport has received no indication there will be a change with the new airline.

“These kinds of friendly mergers generally take months, if not years, to roll out and the airline will be rolling out any changes over time,” Rowe said. “They certainly have a lot of cities in the United States that they’re working with and I haven’t heard that any of their cities have gotten any indication of any kind of service change at this point.”

This is the fourth major consolidation of domestic airlines in the last five years, according to New York-based ratings agency Fitch Ratings.

The merger will provide an opportunity for route and hub changes. Some of the airlines’ hub airports are likely to be strengthened by the move, while others will be weakened, Fitch said. The combined company would have hubs at Dallas-Ft. Worth, Miami, Chicago, Philadelphia, Charlotte and Phoenix. But it is unlikely these hubs are all necessary at current operational levels to maintain an efficient single network, the ratings agency said.



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