US Airways Group, spurned in three prior merger attempts, will combine with bankrupt AMR Corporation’s American Airlines in a $11-billion deal to create the world’s largest carrier.
US Airways Chief Executive Officer Doug Parker will run the new airline, which will retain American’s name, as AMR CEO Tom Horton becomes chairman, the companies said today in a statement. AMR creditors will own 72 per cent of the stock, while 28 per cent will go to US Airways shareholders. The deal caps a wave of consolidation that swept up five of the 10 biggest US airlines since 2005. Along with United Continental Holdings and Delta Air Lines, Fort Worth, Texas-based American will be one of just three US full-service carriers with trans-oceanic routes.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” Parker, 51, said in a statement. He began pursuing American shortly after it sought bankruptcy protection on November 29, 2011.
For Parker, taking over at American completes an 11-year ascent to the top of the global industry. America West Holdings Corp. was the eighth-biggest US airline when he became CEO there in 2001, four years before he combined that carrier with US Airways. Bids to buy Delta and two efforts at a United Airlines merger all fell through in the past six years.
The American deal also concludes a quest that Parker began shortly after AMR filed for Chapter 11 protection on November 29, 2011. He wooed AMR’s unsecured creditors committee, an ad hoc bondholder group and American’s unions as the airlines agreed in August to swap confidential data as a prelude to a tie-up.
US Airways stockholders will receive one share of the new company for each share they hold.
The board of the new company will have 12 members, with Horton and two others from American, four from US Airways and five appointed by AMR’s creditors.
“Until the transaction is completed, American Airlines and US Airways will remain separate companies and it will be business as usual for all of us,” Parker told US Airways employees in a message today.
Regulatory review
The AMR-US Airways combination must be approved by the US Justice Department, which could order asset sales, if it finds the deal creates a monopoly in any area, and shareholders of Tempe, Arizona-based US Airways. It also must be endorsed by the court overseeing AMR’s bankruptcy. US Airways rose 0.6 per cent to $14.75 at 6:30 am in New York before regular trading. Investors already had been betting on a deal, almost doubling the price since January 25, 2012, when the company confirmed its interest in a merger, through yesterday.
The merger returns American to the top spot in global passenger traffic, a spot it secured with the 2001 purchase of Trans World Airlines Inc. It fell to No. 2 when Delta bought Northwest Airlines Corp. in 2008, then slid to third in 2010 when former United parent UAL merged with Continental Airlines. http://www.business-standard.com/article/international/us-airways-american-airlines-create-world%E2%80%99s-largest-carrier-in-11-bn-deal-113021400645_1.html
US Airways Chief Executive Officer Doug Parker will run the new airline, which will retain American’s name, as AMR CEO Tom Horton becomes chairman, the companies said today in a statement. AMR creditors will own 72 per cent of the stock, while 28 per cent will go to US Airways shareholders. The deal caps a wave of consolidation that swept up five of the 10 biggest US airlines since 2005. Along with United Continental Holdings and Delta Air Lines, Fort Worth, Texas-based American will be one of just three US full-service carriers with trans-oceanic routes.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” Parker, 51, said in a statement. He began pursuing American shortly after it sought bankruptcy protection on November 29, 2011.
For Parker, taking over at American completes an 11-year ascent to the top of the global industry. America West Holdings Corp. was the eighth-biggest US airline when he became CEO there in 2001, four years before he combined that carrier with US Airways. Bids to buy Delta and two efforts at a United Airlines merger all fell through in the past six years.
The American deal also concludes a quest that Parker began shortly after AMR filed for Chapter 11 protection on November 29, 2011. He wooed AMR’s unsecured creditors committee, an ad hoc bondholder group and American’s unions as the airlines agreed in August to swap confidential data as a prelude to a tie-up.
US Airways stockholders will receive one share of the new company for each share they hold.
The board of the new company will have 12 members, with Horton and two others from American, four from US Airways and five appointed by AMR’s creditors.
“Until the transaction is completed, American Airlines and US Airways will remain separate companies and it will be business as usual for all of us,” Parker told US Airways employees in a message today.
Regulatory review
The AMR-US Airways combination must be approved by the US Justice Department, which could order asset sales, if it finds the deal creates a monopoly in any area, and shareholders of Tempe, Arizona-based US Airways. It also must be endorsed by the court overseeing AMR’s bankruptcy. US Airways rose 0.6 per cent to $14.75 at 6:30 am in New York before regular trading. Investors already had been betting on a deal, almost doubling the price since January 25, 2012, when the company confirmed its interest in a merger, through yesterday.
The merger returns American to the top spot in global passenger traffic, a spot it secured with the 2001 purchase of Trans World Airlines Inc. It fell to No. 2 when Delta bought Northwest Airlines Corp. in 2008, then slid to third in 2010 when former United parent UAL merged with Continental Airlines. http://www.business-standard.com/article/international/us-airways-american-airlines-create-world%E2%80%99s-largest-carrier-in-11-bn-deal-113021400645_1.html
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