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American Airlines and US Airways merger nears as two sides meet American Airlines and US Airways merger nears as two sides meet
(7 months later)
American Airlines and US Airways executives met Wednesday as they appear close to finalising their long-awaited merger.American Airlines and US Airways executives met Wednesday as they appear close to finalising their long-awaited merger.
The merger, which could be announced as early as Thursday, will create the US's largest airline and the latest in a series that has reshaped the industry. The combined company would have a fleet of 1,500 aircraft, $39bn in revenues and employ 100,000 people. If approved, it will be the third major US airline merger since 2008, fueling fears of higher ticket prices and fewer choices for consumers.The merger, which could be announced as early as Thursday, will create the US's largest airline and the latest in a series that has reshaped the industry. The combined company would have a fleet of 1,500 aircraft, $39bn in revenues and employ 100,000 people. If approved, it will be the third major US airline merger since 2008, fueling fears of higher ticket prices and fewer choices for consumers.
The two sides are reportedly discussing how the company will be divided between shareholders. Also under discussion is the future role of Tom Horton, chief executive of AMR, American Airline's parent company.The two sides are reportedly discussing how the company will be divided between shareholders. Also under discussion is the future role of Tom Horton, chief executive of AMR, American Airline's parent company.
AA has been in bankruptcy since 2011. Its three main unions are on the creditors' committee and last year threw their weight behind the merger after AA brushed off US Airways' original offer.AA has been in bankruptcy since 2011. Its three main unions are on the creditors' committee and last year threw their weight behind the merger after AA brushed off US Airways' original offer.
US Airways chief executive Doug Parker is reportedly keen to take over as both chief executive officer and chairman of the new company. Last year AA's unions said Parker's merger plan would save more jobs that AMR's plan to restructure as a standalone business.US Airways chief executive Doug Parker is reportedly keen to take over as both chief executive officer and chairman of the new company. Last year AA's unions said Parker's merger plan would save more jobs that AMR's plan to restructure as a standalone business.
The Justice Department has not challenged an airline merger since 2000's proposed United-US Airways merger. Since then United and Continental have merged alongside Delta and Northwest.The Justice Department has not challenged an airline merger since 2000's proposed United-US Airways merger. Since then United and Continental have merged alongside Delta and Northwest.
The nonprofit group American Antitrust Institute (AAI) has called for an investigation of the merger, arguing it will substantially reduce competition on a number of routes, create regional strongholds at key airports driving traffic to their hubs and depriving smaller communities of air service.The nonprofit group American Antitrust Institute (AAI) has called for an investigation of the merger, arguing it will substantially reduce competition on a number of routes, create regional strongholds at key airports driving traffic to their hubs and depriving smaller communities of air service.
The group published a study with the Business Travel Coalition that concluded ticket prices rose 20% on some key Delta routes and 30% on some United-Continental routes following their mergers.The group published a study with the Business Travel Coalition that concluded ticket prices rose 20% on some key Delta routes and 30% on some United-Continental routes following their mergers.
Diana Moss, vice-president of the AAI, said: "We have had two big legacy mergers in the past 10 years. It's really time that the Department of Justice looked at how these mergers have affected the market."Diana Moss, vice-president of the AAI, said: "We have had two big legacy mergers in the past 10 years. It's really time that the Department of Justice looked at how these mergers have affected the market."
Allison Smith, a former deputy assistant attorney general in the antitrust division of the Department of Justice, said she expects regulators to take a "close look" at the merger.Allison Smith, a former deputy assistant attorney general in the antitrust division of the Department of Justice, said she expects regulators to take a "close look" at the merger.
Smith, now an antitrust lawyer with McDermott Will & Emery, said: "The Department of Justice has allowed mergers where the networks have been complimentary and there are not too many overlapping routes."Smith, now an antitrust lawyer with McDermott Will & Emery, said: "The Department of Justice has allowed mergers where the networks have been complimentary and there are not too many overlapping routes."
When United merged with Continental the combined entity had to sell slots at Newark airport to satisfy regulators. Smith said AA and US may have to make similar concessions.When United merged with Continental the combined entity had to sell slots at Newark airport to satisfy regulators. Smith said AA and US may have to make similar concessions.
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