Merger of US Airways, American Airlines Confirmed

This is a big deal for Philadelphia, where one of the U.S. Airways hubs is located. What they’re saying about the merger:

New York Times: “Ending a yearlong courtship by US Airways, American Airlines agreed to merge with the smaller carrier, paving the way for the creation of the nation’s largest airline. The boards of the companies have unanimously approved the deal, valued at $11 billion, according to a news release Thursday morning. 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. Under the terms of the deal, US Airways’ shareholders will own 28 percent of the combined airline, while 72 percent of the stake will be held by AMR shareholders, debtor, labor unions and American employees.”

Reuters: “US Airways Group Inc (LCC.N) has spent years looking for a merger partner only to be turned away and labeled the “ugly girl” amid a wave of U.S. airline industry consolidation. It finally saw an opportunity in the fall of 2011, when rumors swirled that American Airlines was in trouble. In the face of AMR CEO Tom Horton’s initial resistance, the US Airways team spent several months wooing American’s creditors and labor unions, hoping to persuade them to put pressure on management to come to the table.”

Washington Post: “The expected takeover by the smaller, younger US Airways brings to an ironic end a consolidation in the domestic airline industry that has been going on, in fits and starts, for more than two decades. The seeds were planted back in the late 1970s when Jimmy Carter and Ted Kennedy engineered the deregulation of the airline industry, allowing low-cost upstarts to challenge the dozen or so major carriers. The resulting expansion in the industry’s capacity drove down prices, just as the deregulators hoped it would, but put strain on legacy carriers locked into expensive planes, union contracts and airport leases. Each turn in the economic cycle brought another round of bankruptcies and consolidation as once-proud brands like Pan Am and TWA and Eastern were all retired.”

USA Todayk: “Although US Airways’ management will have many of the top jobs in the merged airline, CEO Doug Parker and other US Airways executives are on record as saying that they will assume the American name and brand. They’ve also said they intend to move the company’s headquarters from Arizona to American’s current location in Texas.”