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American Airlines, US Airways announce $11 billion merger

The airlines will maintain all domestic hubs and operate 6,700 flights daily, according to their CEOs

American Airlines (AA) and US Airways have agreed to a merger deal that would create the world’s largest airline, valued at $11 billion.

The boards of US Airways and AA parent company AMR Corp. voted unanimously to approve the merger, which still must receive antitrust clearance from federal regulators. The proposal also needs approval from the bankruptcy court that has overseen AMR’s restructuring since its November 2011 Chapter 11 filing.

If the deal is approved, American Airlines shareholders, creditors, labor unions and employees would own 72 percent of the new airline, according to the Wall Street Journal. Shareholders in the smaller US Airways would own the remaining 28 percent.

The new company would keep the American Airlines brand and paint design, and would operate out of AA’s current headquarters in Fort Worth, Texas. US Airways CEO Doug Parker will assume the same role in the newly merged company, while AMR’s chief executive, Tom Horton, will serve as nonexecutive board chairman until next year.

The AA-US Airways deal continues a trend of airline industry mergers, and will result in four airlines—American, United, Southwest and Delta—controlling more than 70 percent of the domestic market, CBS News reports. Such consolidations can help airlines survive in an environment of rising fuel costs and shrinking profit margins, although some industry experts argue that the decreased competition raises ticket prices for consumers.

For more InsideCounsel coverage of the airline industry, see:

American Airlines wants more time to reorganize

US Airways and American Airlines may merge soon

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American Airlines labor agreement with pilots approved

Woman sues Southwest Airlines for $800,000 over hot tea

More passengers join suit against ranting JetBlue pilot

Judge considers whether United Airlines can be blamed in World Trade Center case


Alanna Byrne

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