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American Airlines and US Airways Officially Merge in Dallas

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American Airlines and US Airways Officially Merge in Dallas

American Airlines and US Airways Officially Merge in Dallas
December 09
09:29 2013

DALLAS — American Airlines and US Airways officially merged Monday at an event in Dallas, Texas.  The official addition of the world’s largest airline to the NASDAQ signals the end of a long and tumultuous courtship between the two.

Hundreds of airline executives, VIPs, employees, and press gathered in a huge nondescript room inside company headquarters near the DFW airport, as new CEO Doug Parker rang a bell to signal the birth of the combined carrier on the NASDAQ. The new American Airlines officially began trading under the revitalized symbol of AAL only moments later at $23.95 (up to $24.5 at present). The move signals the latest development in the 85 year history of American Airlines (AA).

Speaking on the podium just before ringing the bell, Parker said that “we will restore AA to the worlds greatest airline in the world.” Parker went on to forecast that AA “will become the most profitable airline in the world, the one our customers want to fly , and the best place to work in industry.”

Parker was joined on stage by a handful of previous American Airlines’ top brass from years past. Tom Horton, who until this morning was AA’s CEO was joined by controversial AA CEO Robert Crandall. Crandall, who led the company from 1985 to 1998, was known for creating the first loyalty program, the reservation system Sabre, and pioneering yield management. Speaking to the media, the famously candid Crandall said that “Parker and team have set the plate well for success. There needs to be a determined effort to improve and they have the urge to be there. The real key to make this happening is that employees and and management are on the same page.”

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While the two airlines now share the same stock ticker and leadership, much work remains before they will become one-in-the-same and Parker’s lofty ambitions can be realized. Everything from repainting US Airways airplanes to AA livery to new ticket counters, changes in on-board culture to merging of loyalty programs will need to be replaced, redone, or consolidated. The carrier must also merge their operating certificates with the FAA, a step that could take up to two years by itself.

In the meantime to two will remain distinct carriers. To smooth the relationship between them the two will have a full codeshare agreement. US will wind up joining the oneworld alliance, of which AA was a founding member. Loyalty programs will be consolidated

The merger follows American’s recent release from bankruptcy, a required condition before the unification could take place. Prior to their release, the merger had faced stiff opposition from US Department of Justice regulators, who had filed a lawsuit back in September to prevent the proposed deal from going through. Ultimately the DOJ gave a green light to the deal when both carriers were forced to divest a significant number of slots and assets at airports across the country.

For Parker and his US Airways team, this would be the second time they’d pulled off what many thought was impossible: a reverse takeover of a much larger airline. Parker and his team had pursued a merger with American for the better part of several years. Despite repeatedly being rebuffed by AA, Parker kept at it, eventually winning support from labor with both carriers. Parker returned to the table with AA brass with increased leverage all but forcing American to give-in and accept the offer.

Parker’s previous success was in 2005, when he took over US Airways via America West Despite labor and integration issues, Parker “promptly delivered industry – leading margins at then bankrupt US Airways”, according to Imperial Capital analyst Bob McAdoo. With the American / US Airways merger complete, the Parker guppy once again swallowed a much larger whale.

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