December 10, 2013 in Business

Revitalized American emerges from merger

Deal creates world’s largest airline
David Koenig Associated Press
 

Outgoing American Airlines CEO Tom Horton, left, and former CEO Robert Crandall, right with glasses, applaud as new CEO Doug Parker, center, remotely rings the Nasdaq bell, as hundreds of employees of the new American Airlines gather at the company’s headquarters in Fort Worth, Texas, after the merger of American Airlines and US Airways on Monday.
(Full-size photo)

Changes for customers

Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other’s flights, increasing the destinations available to customers of both.

FORT WORTH, Texas – American Airlines emerged from bankruptcy protection and US Airways culminated its long pursuit of a merger partner as the two completed their deal Monday to create the world’s biggest airline.

It’s the latest in a series of mergers that will leave four airlines controlling more than 80 percent of the U.S. air-travel market. With less competition, the airlines have successfully limited the number of seats, boosting prices and returning to profitability.

American’s old parent, AMR Corp., is gone, replaced by the new American Airlines Group Inc.

CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked onstage by executives and labor leaders of both airlines and in front of a crowd of cheering employees.

“Our goal here is to go and restore American Airlines to its position as the greatest airline in the world,” Parker said. The largest airline as recently as 2008, American struggled through a decade of huge losses and fell behind United and Delta in size.

For passengers, the merger won’t mean many immediate changes. Whether the deal leads to higher ticket prices, the issue at the heart of legal challenges from the government and consumer groups, remains to be seen.

Parker said the merger won’t lead to higher airfares because the new American plans to keep all the service currently offered by American and US Airways.

“Airline prices are like prices in other businesses – they track with supply and demand, and we’re not reducing any of the supply,” he told the Associated Press.

Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other’s flights, increasing the destinations available to customers of both.

It will take about two years to combine American’s fleet and workforce with those of US Airways, Parker said. US Airways will join Continental, Northwest and other airlines that now exist only in the memories of employees and longtime travelers.

In their first day of trading, shares of American Airlines Group rose 65 cents, or 2.7 percent, to close at $24.60.

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