American Completes Merger Deal With US Airways
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MIAMI (CBSMiami) – Amerian Airlines parent company AMR Corporation completed its merger deal Monday with US Airways to officially form American Airlines Group Inc.
The $11 billion merger between US Airways and American, which has a hub at Miami International Airport, creates the largest airline in the world.
“The Miami-Dade Aviation Department proudly celebrates the official creation of the new American Airlines, and we look to forward to maintaining the Latin American and Caribbean hub for what will now be the world’s largest airline,” according to a statement from the county’s aviation director Emilio Gonzalez. “The merger of American Airlines and US Airways puts our hub carrier on stronger financial footing, which is fantastic news for travelers, employees and business partners at Miami International Airport and throughout our community.”
With American’s merger, it along with United, Delta, and Southwest will control roughly three-quarters of U.S. airline traffic.
The Justice Department, along with six states and the District of Columbia, tried to block the merger. The DOJ said the combination of the companies would reduce competition for commercial air travel in several markets and would likely result in higher airfares for less service.
But American can’t guarantee it won’t raise prices.
“We don’t anticipate raising prices,” said American Airlines vice-president Marilyn DeVoe. “But of course prices go with market impacts, operational costs, so we’ll be competitive with everyone else.”
American also said there’s not going to be a loss of jobs that typically comes with large companies merging.
“We don’t anticipate losing any jobs,” said DeVoe. “In fact, we’re growing here (South Florida). We’ve added seven new destinations this year alone.”
American Airlines Group Inc. CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked on stage 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.
Just five years ago, American was the world’s biggest airline. It boasted a history reaching back 80 years to the beginning of air travel. It had popularized the frequent-flier program and developed the modern system of pricing airline tickets to match demand.
But American then 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 dismissed the notion that fewer airlines will lead to higher airfares because, he said, 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 said.
Some travelers worry though with fewer carriers will come higher fares.
“Well, we wouldn’t be able to travel as often as we like with a family of four. With less competition, higher prices, it will make travel less attainable for us,” said Rainee Richardson, a traveler.
While others see the merger as a plus.
” I think it’s more of a convenience for travelers… It’s like the world’s getting smaller,” said traveler Michael Preston.
American ranked 14th out of 15 airlines in government rankings for on-time performance in 2012 (US Airways was fifth). Only United had a higher rate of complaints (but US Airways was barely better than American).
It will take about two years to combine American’s fleet and workforce with those of US Airways, Parker said.
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.
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