American Airlines and US Airways announce $11 billion merger

Posted on: February 20th, 2013 by Steve Larson

Fotolia PlaneAMR Corp.’s American Airlines and U.S. Airways are joining forces in an $11 billion merger to create the world’s largest airline company.   According to the terms of the deal, AMR bankruptcy creditors will own 72% of the new company while U.S. Airways shareholders will own 28%. Doug Parker, CEO of U.S. Airways, will continue to serve as chief of the new airline, while AMR CEO Tom Horton will become the non-executive chairman.  Horton will get a performance payment for successfully guiding AMR through bankruptcy.

Even though the boards of each company have agreed to the merger, additional hurdles are in the way before the deal can be completed.  The merger will need to be approved by the judge presiding over American’s bankruptcy and the Department of Justice.  The new company plans to take on the American Airlines brand name.

On February 14, shares of U.S. Airways fell 4.57% following news of the proposed merger.