American Airlines and US Airways have confirmed that they are to merge in an $11 billion deal to create the world’s biggest airline.
But business travel groups have warned that the merger is likely to result in higher fares and cuts in flights to some destinations.
The boards of the two carriers finally agreed to the merger following meetings in the US last night (February 13) and the official announcement was made earlier today (February 14).
The new company will keep the American Airlines' name although it will be run by US Airways' chief Doug Parker who will act as CEO. American’s boss Tom Horton will be chairman of the board. The airline will also remain part of the Oneworld alliance alongside British Airways, American's transatlantic joint venture partner.
The combined airline will be bigger than its US rivals United and Delta, which previously completed their own mergers with Continental and Northwest respectively. The new expanded American Airlines will offer 6,700 daily flights to 336 locations in 56 countries. For full details about the new airline, click here.
Parker said in a statement: "We are pleased to announce that American Airlines and US Airways will combine to create a premier global airline. Our combined airline joins two highly complementary networks with access to the best destinations around the globe – offering you increased choices, improved efficiency and better options to explore the globe with our Oneworld Alliance.
"The combined company will retain the iconic American Airlines brand name, and will provide you with more choices and better service throughout the world. The combined company will be headquartered in Dallas-Fort Worth and will maintain a significant corporate, operational and hub presence in Phoenix."
AMR, the parent company of American Airlines, will take a 72 per cent stake in the new company, with US Airways owning 28 per cent.
The airlines said they expected all of the current American and US Airways' hubs to be maintained - Charlotte, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington DC.
The merger will have to be approved by American’s bankruptcy judge - the airline has been bankruptcy protection for the last 14 months - and competition regulators.
But Kevin Mitchell, chairman of the US-based Business Travel Coalition, warned that travellers would face higher fare and reduced competition due to the merger.
“From a consumer standpoint – individual traveller or corporate travel department - there are few benefits to offset the negative impacts of this proposed merger that include reduced competition, higher fares and fees and diminished service to small and mid-size communities,” said Mitchell.
“To be clear, there is benefit in a financially viable air transportation system. However, previous mergers have already enabled seat capacity cuts, higher fares and billions of dollars in fees for ancillary services resulting in a financially strengthening industry.
“As such, consumer harms from this merger are indeed exacerbated, as there are no substantial countervailing consumer benefits.”