Sources: American Airlines, US Airways On Verge Of Merging

Thursday, February 7th 2013, 7:42 am

By: Craig Day

It appears a deal to merge American Airlines and US Airways could be days away.

After months of negotiations with labor unions and more than a year after filing bankruptcy, the decision on the future of American Airlines could come next week.

Neither airline is talking, but sources out of Dallas and industry analysts say all the pieces seem to be falling into place to create the world's largest airline, worth more than $10 billion, which would help American fly out of turbulent times.

Sources have told CBS News that a merger between American Airlines and US Airways will likely happen soon.

American Airlines: Turbulent Times

AMR's board of directors is meeting Monday to discuss a possible merger. A deal could be reached the next day.

"They're going to go to the bankruptcy judge and say we have a restructuring plan and we have a merger agreement in place," said CBS Travel Editor Peter Greenberg. "It's unlikely at this point, although it could happen, but it's unlikely at this point that the bankruptcy judge is going to overturn that."

Both airlines have declined to comment on any reports until a deal is finalized, but industry analysts believe it's almost a certainty, with a merger agreement and labor agreements already in place.

"The only thing that is unresolved right now is the final hierarchy of the corporate board, as well as the executive officers of the newly merged airline," Greenberg said.

That hierarchy would likely mean AMR's CEO Tom Horton will move out of the day-to-day managing of the new airline, but would remain on the board of directors.

US Airways' CEO Douglas Parker will likely run the new airline.

"Right now, it looks like the US Airways management taking charge is what unions and creditors want," said retired airline executive Mark Drusch.

The merged airline would continue to be called American and remain based in Fort Worth. AMR filed for bankruptcy protection in November 2011.

2/5/2013 Related Story: American Airlines Asks Bankruptcy Judge For More Time

Corporate leaders wanted to restructure the company and exit from bankruptcy before considering a merger.

After pressure from creditors, AMR agreed to consider a merger.

But experts say bigger doesn't necessarily mean better.

"Remember, history tells us that bigger airlines don't stay bigger for that much longer," Greenberg said. "They tend to cut capacity, they tend to cut routes, especially domestically. And go for much higher-yielding international routes, so look for that to happen."

The head of the local Transport Workers Union is in Fort Worth and was unavailable to comment on the possible merger.

The judge overseeing AMR's bankruptcy has to sign off on any agreement, so it could take weeks to finalize the deal.


Get The Daily Update!

Be among the first to get breaking news, weather, and general news updates from News On 6 delivered right to your inbox!

More Like This

February 7th, 2013

April 18th, 2022

April 18th, 2022

April 18th, 2022

Top Headlines

September 25th, 2022

September 24th, 2022

September 24th, 2022

September 24th, 2022