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American Airlines, US Airways To Merge

(Photo credit: Saul Loeb/AFP/Getty Images)

(Photo credit: Saul Loeb/AFP/Getty Images)

PITTSBURGH (KDKA/AP) — American Airlines and US Airways will merge and create the world’s biggest airline. The boards of both companies approved the merger late Wednesday, according to four people close to the situation.

The carrier keeps the American Airlines name but will be run by US Airways CEO Doug Parker. American’s CEO, Tom Horton, will become chairman of the new company, these people said. They requested anonymity because the merger negotiations were private.

A formal announcement is expected Thursday morning.

The deal has been in the works since August, when creditors forced American to consider a merger rather than remain independent. American has been restructuring under bankruptcy protection since late 2011.

Consumers will now have four mega airlines to choose from, which control more than 80 percent of air traffic.

“Even though people say that this particular merger of US Airways and American Airlines isn’t going to raise ticket prices, I don’t believe that one bit,” FareCompare.com CEO Rick Searley said.

The big question at Pittsburgh International Airport is what effect will the merger have on jobs?

Thousands of jobs have been lost at the airport over the last decade after US Airways moved its hub to Charlotte and Philadelphia.

Together, American and US Airways will be slightly bigger than United Airlines. Travelers won’t notice immediate changes. It will likely be months before the frequent-flier programs are merged, and possibly years before the two airlines are fully combined.

If the deal is approved by American’s bankruptcy judge and antitrust regulators, the new American will have more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates. It will expand American’s current reach on the East Coast and overseas.

The merger is a stunning achievement for Parker, who will run the new company. Parker’s airline is only half the size of American and is less familiar around the world, but he prevailed by driving a wedge between American’s management and its union workers and by convincing American’s creditors that a merger made business sense.

  • Listen to James Carlson with the International Association of Machinists and Aerospace Workers on NewsRadio 1020 KDKA:

Just five years ago, American was the world’s biggest airline. It boasted a history reaching back 80 years to the beginning of air travel. It had popularized the frequent-flier program and developed the modern system of pricing airline tickets to match demand.

But years of heavy losses drove American and parent AMR Corp. into bankruptcy protection in late 2011. The company blamed bloated labor costs; its unions accused executives of mismanagement.

RELATED LINKS:
Some Have Reservations Over Possible Merger Between U.S. Airways, American Airlines (1/26/13)
More Pittsburgh International Airport News
More Reports From Paul Martino

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

 

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