LITTLE ROCK — American Airlines on Thursday agreed to merge with US Airways Inc., paving the way for the creation of the nation’s largest airline.
The boards of the companies unanimously approved the deal, valued at $11 billion, according to a news release Thursday. Under the terms of the deal, US Airways shareholders would own 28 percent of the combined airline, while American Airlines shareholders, creditors, labor unions and employees would own 72 percent.
The merger would create a company with the size and breadth to compete against United Airlines and Delta Air Lines Inc., which have grown through mergers in recent years and are currently the biggest domestic carriers. The combined airline will have more than 100 million frequent fliers.
The deal, which was completed in recent days, could be formalized as American leaves bankruptcy. W. Douglas Parker, the chairman and chief executive of US Airways, would take over as American’s chief executive.Thomas W. Horton, chairman and chief executive of the AMR Corp., American’s parent, would be chairman of the combined company, though his tenure could be limited.
“I have been a long proponent of consolidation in the industry,” Parker said on a conference call. “And this is the last major piece needed to rationalize the industry and make it profitable.”
Parker said that the two airlines have only 12 routes overlapping out of a combined 900 routes that the two airlines serve together. In addition, he said, more cities would be serviced: American flies to 130 cities that US Airways does not, and, likewise, US Airways flies to 62 cities that are not served by American.
“This is an extremely complementary merger,” Parker said.
The combined airline would offer 6,700 daily flights to 336 destinations in 56 countries. It said that it expected to keep all its hubs.
The merger still needs to pass several steps. It must be approved by American’s bankruptcy judge in New York. US Airways shareholders would also have to approve the deal.
In addition, it will be reviewed by the Justice Department’s antitrust division, although analysts expect regulators to clear the deal. The two companies expect the merger be completed in the third quarter.
Of the 50 busiest domestic routes, the two carriers compete directly on only one: Los Angeles to Phoenix, according to OAG, a company that tracks airline routes and schedules. And on hundreds of less-traveled routes, they only overlap a dozen times, mostly between their hub cities. For instance, both carriers fly Charlotte, N.C. to Miami, Dallas to Philadelphia and Chicago to Phoenix.
The complementary nature of the markets they serve should help the airlines avoid any major hurdles with antitrust regulators, industry experts say. And it will serve the merged company especially well in today’s airline business, which is all about scale.
Commercial aviation is increasingly dominated by megacarriers.
Delta bought Northwest Airlines Inc. in 2008, creating what was then the world’s largest airline. Two years later, United leapfrogged ahead when it merged with Continental Airlines Inc.
Information for this article was contributed by Scott Mayerowitz of The Associated Press.
Business, Pages 27 on 02/15/2013