American Airlines parent company AMR Corporation and US Airways have announced a merger to create the world’s largest airline, exceeding United Airlines and Delta Air Lines with 6,700 daily flights.
According to a release from American Airlines, the combined value of the two airlines is $11 billion, based on the current stock price of US Airways. The newly merged mega-carrier will exist under the name American Airlines.
The American Airlines merger will give American Airlines a better financial position after it filed for bankruptcy protection in November 2011. The airline expects to save $1 billion per year by 2015. Expected cost of the merger is approximately $1.2 billion, which is to be spread out over the next three years.
Current AMR stockholders will own 72 percent equity of the new airline, and US Airways stockholders will represent 28 percent ownership. Employees of the airlines will benefit from reciprocal travel privileges and more long-term employment opportunities at a company with a firmer financial foundation. American Airlines said this solid foundation will provide a “path” to enhanced pay and benefits for employees, as well.
Some of the immediate strategic goals of the new American Airlines is to increase its presence in the western United States and solidify its strong position in the Caribbean and Latin America. It will also serve 21 destinations in the Middle East and Europe. The expansion and greater job stability at the airline could possibly lead to promising career opportunities in the future.
The US Airways and American Airlines merger will give customers access to a vast worldwide network. Tom Horton, the Chairman, President and CEO of American Airlines, said in a statement, “The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available.”
The new airline will continue the “Oneworld Alliance” program established by American Airlines. The Oneworld Alliance is a massive airline membership network consisting of 800 destinations in 150 countries. Members can fly all over the world with a variety of affiliated airlines as part of the Alliance.
Horton said the merging will give the airline greater financial and operational strength, allowing for more investment. The company is looking toward the future by investing in “technology, products and services.” American Airlines claims to currently have orders for more than 600 new mainline aircraft.
[cf]skyword_tracking_tag[/cf]
No Comment