US Airways, American merger would create $11 billion airline giant


American Airlines agreed to merge with US Airways, 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. 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, 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.

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.

"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 fly, and, likewise, US Airways flies to 62 cities that are not served by American.

"This is an extremely complementary merger," he said.

The combined airline will offer 6,700 daily flights to 336 destinations in 56 countries. It said that it expected to keep all its hubs.


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