American, US Airways vote to merge to make biggest airline ever, reports say
A marriage would be the last significant airline merger in a U.S. industry dominated by a handful of powerful, mega-sized carriers.
American Airlines, a storied but struggling carrier that sought bankruptcy protection fifteen months ago, will merge with US Airways, creating what will be the largest carrier in the world, according to The Wall Street Journal and Dallas Morning News..
After weeks of discussion and speculation, the boards for the two carriers voted on Wednesday to combine. The deal, which The Journal says will be announced Thursday, would still need the approval of the bankruptcy court overseeing American's restructuring, as well as federal regulators.
US Airways spokesman Todd Lehmacher would not comment on the report.
If the tie-up is approved, the marriage of US Airways and American would represent the last significant merger in the U.S. airline industry.
Delta and Northwest, United and Continental, and Southwest and AirTran all paired up in the last five years. A union of US Airways and American would mean that four mega-sized carriers control 87% of the U.S. airline industry's seats, according to Seth Kaplan, an analyst for Airline Weekly, an industry trade publication.
Less competition may lead to higher fares in some markets, some industry observers say.
"For consumers, you have a smaller, less competitive industry with somewhat higher fares than you would have had the mergers not happened,'' Kaplan says.
But "on the other hand, you have airlines that can now invest in their product,'' like roomier seats in the premium cabins or better entertainment, Kaplan says. "For years U.S. airlines were just trying to get through the day. They didn't have money for those types of things.''
Details of the deal have yet to emerge, but US Airways CEO and Chairman Doug Parker has said that a newly combined airline would hold on to American's iconic name, and locate its headquarters in American's hometown of Fort Worth, Texas.
In the wake of a merger, a smaller hub, such as US Airways' foothold in Phoenix, may see some service migrate to a larger portal like Dallas, American's base. But as of January, US Airways and American had overlapping non-stop service on only a dozen routes. That means they likely won't have to pare many destinations.
Instead, passengers on the newly merged airline will be able to fly across a vastly expanded map that would likely include US Airways' east coast hubs of Charlotte and Philadelphia and American's strong international presence across the Atlantic and in Latin America. The combined carrier will also likely stick with American's frequent flyer program, the industry's oldest and one of its most popular.
"In the short-term, frequent flyers will benefit from more routes and more choices, and a management that will likely want to reassure them that the benefits they're used to won't change,'' says Gary Leff, co-founder of the frequent flyer community Milepoint.com and author of the ViewFromTheWing.com blog.
- So two crappy ass airlines merge to make an even crappier one. Big whoop!
And you can kiss Phoenix goodbye as a hub...too close to LAX (where AA has a focus city/hub operation) and too redundant for Dallas/Ft. Worth (much larger airport, better East-West connections). I wonder what will happen to USAirways hub in Philadelphia? They're hemmed in by NYC and Washington DC's airspace...
- I HATE USAirways, and really hoped this wouldn't happen. American was one of the last airlines with SOME integrity.
This is bad news. USAirway's Doug Parker is a slime-ball, typical fratboy CEO asshole.
Now that Dougie has dismantled the employee's benefits and pay, and ruined the reputation of USAirways with the Arizona based AmericaWest shit for fuck airline, I except this is the end of American as we know it. British Airways better distance themselves for the coming implosion.
Only hope, get rid of ALL Arizona based, country club CEO drunkards and use American 's leadership instead.
- They should call themselves Pan American Airways
- Yep, the biggest and worst airline ever!
- Philly is US Airways main international hub.
Airport officials there are confident nothing will happen to their beloved airport.
Yeah, cause New Yorkers will have no problem with having to go to Philly to catch international flights. Residents and business people of the 2nd largest city in the US flying to the 5th largest city in the US for flights? I don't think so.
Typical of the provincial attitude of so many Philly people.
- What does that have to do with anything, r5? you sound very provincial, btw
- AA's hubs - JFK, DFW, Miami, O'Hare, LAX
US Airways - Philly, Charlotte, Phoenix
I guess they could eliminate Philly. Charlotte might be useful to compete with Delta in the southeast.
- I don't know that they will eliminate, R7. Gates in large airports are almost impossible to get. This merger gives them gates they would not be able to get otherwise.
- R5 - I'm not a Philadelphian, I was wondering out loud what would happen to that particular hub precisely because of AA's presence at JFK. I think AA won't really reduce anything to benefit Philadelphia in this merger. The O&D market in NYC is way too large and their Trans-Atlantic routes do pretty well. I'm wondering if this will be a hybrid East-Coast hub situation like United has with their hub at Dulles and the former Continental stronghold in Newark.
And NYC is the largest city in the US while LA is the 2nd Largest.
Phoenix will be reduced, but not to the degree USAirways fucked over Pittsburgh, or how AA dismantled the St. Louis hub after they took over TWA back in the early 2000's.
- [quote] Yeah, cause New Yorkers will have no problem with having to go to Philly to catch international flights. Residents and business people of the 2nd largest city in the US flying to the 5th largest city in the US for flights? I don't think so.
Think again. Have you flown out of either of the NY airports lately? The terminals are dirty, you sit on the runway for an eternity before taking off, and access is impossible. I fly internationally from either Newark or PHL whenever I possibly can.
- Salt Lake! Salt Lake! This is Nancy! We've merged!
- American and United Airlines. They brought us 9/11
And lets not forget the only reason these two airlines are even still in business to this day is because the taxpayers had to bail them out to the tune of $$$$ BILLIONS (at least $4 Million per family) in settlements. I wouldn't fly either one of these airlines if you paid me. So there isn't any way I'll fly their soon to be created disaster
- Why is it that NOBODY seems to have learned the lesson about the problem with 'too big to fail' companies we all learned the hard way in 2008??
- US Air not United r12
- Thank you, r13.
- Sweet Jesus, what a fuck up this will be! Whenever I have to fly to Richmond from Newark, I fly to Charlotte which is a much nicer airport than Philly. Philly airport sucks!!
The last time I flew AA, the plane was 85% senior citizens. When we landed in Chicago, they raised a platform that held all gate-checked luggage. Most of the SCs couldn't reach up or bend down to retrieve their luggage and there was no one to help them. I was in a suit and practically had to crawl on all fours to get my suitcase. I may start driving to Richmond if this is the only way to get there.
- R5, it's been speculated that both JFK and Philadelphia will be kept, but likely with some modifications at Philadelphia. As R9 mentions, the JFK hub will still exist to capture the large O&D market in NYC, Philadelphia will still exist to capture the smaller Philadelphia O&D market but act as the major connecting point across the Atlantic for people from other communities.
- Charlotte won't be affected to much. American has very little presence in the Southeastern US compared to Delta or USAirways, they could route some of their Caribbean routes from there (But their hub in Miami will still have the lion's share of Latin American/Caribbean flights) and Charlotte is a good alternative to the big Kahuna to the south known as Atlanta. I know many people who'll fly USAirways just to avoid changing planes in Atlanta on Delta. I live in ATL, so getting around there isn't a big deal to me, but it is large and overwhelming to many people.
It'll be ironic if American does have a hub in North Carolina if the merger goes through. I remember their attempts at establishing a hub over in Raleigh-Durham back in the mid-1980's that they quickly dismantled about a decade later.
- Operating separately for the time being, according to Tom Horton, American Airlines CEO