American-US Airways merger deal valued at $11 billion

By Jerry Limone

American Airlines parent AMR Corp. and US Airways Group made their merger agreement official on Thursday, with the airlines valuing the deal at $11 billion based on the price of US Airways stock on Feb. 13.

The combined carrier will fly as American Airlines, with headquarters in Fort Worth, Texas.


US Airways stockholders will end up owning 28% of the combined airline. The remaining 72% will be owned by stakeholders of AMR and its debtor subsidiaries that filed for relief under Chapter 11, American’s labor unions and current AMR employees.

The merger is conditioned on approval by the bankruptcy court overseeing American Airlines' Chapter 11 reorganization and US Airways' shareholders. The Department of Justice's Antitrust Division also needs to review the deal.

The airlines expect that the merger deal will be completed in the third quarter of 2013. During the period between the signing and closing of the transaction, a transition-planning team made up of leaders from both companies will develop an integration plan.

US Airways CEO Doug Parker will become CEO of the combined airline, which would be the world's largest, edging out United.

American CEO Tom Horton will become nonexecutive chairman through the combined airline’s first annual meeting of shareholders. Parker will assume the additional position of chairman after Horton’s tenure concludes.

The board of directors will initially be made up of 12 members: three from American, including Horton; four from US Airways, including Parker; and five representatives of AMR creditors.

The new American Airlines will maintain all hubs currently served by both airlines, the carriers said. These include American hubs Chicago O’Hare, Dallas-Fort Worth, Los Angeles, Miami and New York Kennedy, and US Airways hubs Philadelphia, Washington Reagan National, Phoenix and Charlotte.

US Airways and American say that their combination is expected to generate more than $1 billion in annual net synergies in 2015. The airlines expect transition costs of approximately $1.2 billion, spread over the next three years.

More information about the merger is at www.newamericanarriving.com.

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