Post: #1

http://www.wfaa.com/news/business/Americ...01971.html

DALLAS – After more than a year of talks, a merger between American Airlines and US Airways will likely be announced next week, sources tell News 8.

"The economics make so much sense. They're so compelling that I think the creditors and the boards of both companies said 'let's get this done it will be good for everybody," said Mark Drusch, an executive with Fareportal, who also held high-ranking positions with Continental, Delta and Lufthansa.

The board of directors of AMR Corp., American's parent company, will meet on Monday to consider a combination, News 8 has learned.
Officially, American tells us it does not discuss and will not confirm a board meeting next week.

But it’s no secret that both airlines have been swapping financial information over recent months to see if a merger made sense.
Currently at issue is which executive team will lead the new company.
Sources tell News 8 that US Airways CEO Doug Parker will likely take over, and AMR CEO Tom Horton will be given an honorary position on the board such as non-executive chairman.

American’s labor unions, which have long pushed for a merger with US Airways, have publicly stated they don’t want American’s management running the new company.

"Here's the conundrum the board is faced with,” Drusch explained. “If the unions are really digging in saying we don't want Horton around the board has to decide 'Is Horton important enough to keep around to potentially suffer labor disharmony through a merger."

Teams from both airlines are currently collaborating on how to make the merger announcement and where it will take place, sources said.
The new company will be based in Fort Worth, but led by the smaller airline, which is currently headquartered in Phoenix. The combined carrier is expected to retain the American Airlines name.

In January, Horton said an announcement about the future of American would be announced soon. The two airlines have been in official talks for months.

Weeks later, American debuted a new logo and paint scheme for its aircraft. At the time, Horton said he did not expect to have to change the livery again if a merger came to fruition.

Drusch predicted fares would increase in the long-term and even if American decides to merge with its smaller rival next week it's doubtful passengers would see any change for months.

The US Airways board would still have to consider a merger, along with creditors, American’s bankruptcy judge, the U.S. Department of Justice and even the European Union before the two companies would ever become one.

Post: #2

Domestically speaking, I don't think it'll be an issue. Domestic flights are already high enough. The only discounted airline now is Spirit as prices will be high with a merger or not. I am situated here in DFW so am therefore a slave to the One World Alliance (American, Cathay, British Air, LAN).

This works well for American because US Airways has a strong presence in cities such as Phoenix, Philadelphia, and Charlotte so going to those places will increase mileage acquisition & bonuses for people in the same boat I'm in. I would say American Airline flyers wouldn't benefit internationally at all as it'd be the other way around. US Airways is currently a part of the Star Alliance with United Air, but will now have other direct international bases being a part of the same group as LAN, British Air, and Cathay Pacific now.

Post: #3

US Airways being part of the Star Alliance and AA being part of the One Wold Alliance, would be interesting to see how that would play out in regards to for example, me, a frequent flyier with Star Alliance will be able to use my Star Alliance miles to fly with AA within their network (mainly interested in Cathay Pacific to be honest).

Post: #4

(02-07-2013 07:32 PM)Vacancier Permanent Wrote:  US Airways being part of the Star Alliance and AA being part of the One Wold Alliance, would be interesting to see how that would play out in regards to for example, me, a frequent flyier with Star Alliance will be able to use my Star Alliance miles to fly with AA within their network (mainly interested in Cathay Pacific to be honest).

Since it is more or less a foregone conclusion that they will go with One World, I will think the merged company will give you the option of transferring US Airways miles to AA/One World or letting you keep your miles in the Star program. Frankly, I think Star is better but it all depends on where you want to fly.

In terms of pricing I don't think there will be much affect and fares could even get lower if DOT forces them to give up some slots at certain airports and low cost carriers could pick up slots. This could happen at airports where they have overlapping service PHX-DFW, ORD-PHL, LAX-CLT, etc. The merged company could also push fares lower because it would create 3 big US carries and the competition might start heating up.

I do see Phoenix getting wound down in favor of Dallas and Los Angles. What will happen in Philly and New York is also up in the air. Having hubs 100 miles away from each other doesn't really make sense. The fiscally prudent decision is to build up presence in (profitable) Philly and wind down operations at (loss leader) JFK but who knows what they'll decide.

Overall I don’t think this merger will have much effect on the average traveler.

Post: #5

Damn, now I am going to worry about my 100k AA miles and getting screwed in a new rewards system.

Post: #6

It'll pull US Airways out of the Star Alliance, so it has a big negative effect on those of us who have held status for a while.

Post: #7

http://www.marketwatch.com/story/brace-f...eid=yhoof2

Brace for big fare hikes after airline deals
Those flying United from Chicago to Houston pay 57% more over 2009

It’s the fallout from airline mergers, and the planned combination of American Airlines and US Airways could bring a new round of hefty fare increases. When two competitors combine to dominate prime routes, those markets tend to bear the brunt of higher prices.

Consider United Airlines and Continental Airlines, which used to compete for customers flying between Chicago and Houston, for example. After the two airlines merged in 2010, the combined company, which took the United name, now carries 79% of the traffic traveling between Houston’s Bush Intercontinental Airport and Chicago’s O’Hare Airport, not counting connecting passengers. United’s average fare on that route soared 57% in the three months ended September 2012 compared with the same period three years earlier, according to Department of Transportation data compiled by consulting firm Oliver Wyman. By comparison, United’s total average domestic price per mile over the same three-year period went up only 16%.

Other recent mergers include Delta Air Lines’ DAL +1.77% acquisition of Northwest Airlines in 2008, and Southwest Airlines’ purchase of AirTran Airways in 2011.

Travel will change significantly for consumers on a few routes served by both American and US Airways LCC +2.09% . Between Miami and Philadelphia, for example, US Airways carries 54% of travelers, according to DOT data for the third quarter of last year. American has 44%, and a combined American-US Airways will have 98% unless other airlines decide to do battle against the behemoth. A saving grace for price-conscious consumers: Southwest LUV +1.00% flies between Philadelphia and Fort Lauderdale nonstop, and other airlines offer connecting flights.

“There are definitely routes where competition will be significantly eliminated,” said Diana Moss, director of the American Antitrust Institute, a nonprofit group that aims to promote competition, at a March 19 Senate hearing on the American-US Airways deal.

The Delta-Northwest and United-Continental mergers resulted in “substantial elimination of competition on some very important routes,” Moss said. Fare increases resulted -- “and some pretty significant ones. We also saw very few fare decreases.”

A Delta spokesman says many routes where the two airlines together dominate have actually seen increases in traffic, including passengers flying between hub cities and others making connections. “Because demand went up, fares went up,” said spokesman Anthony Black.

United has attracted a larger share of business travelers as a result of its merger, so average fares have gone up since business travelers tend to pay more than vacationers, a spokesman said.

A spokesman for US Airways declined to comment while the Justice Department considers its merger with American. Executives of American and US Airways said in testimony before the Senate in March that overall, their financial projections include no fare hikes. They said their combination will increase competition across the country because they can offer more connections and be a stronger competitor to United and Delta. US Airways officials also have pointed out that in many of the two airlines’ dominant markets, Southwest offers alternatives to nearby airports.