Merger Approved By Us Airways Stockholders

By Author: Steve Robinson
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The impact of the merger of American Airlines and US Airways on cheap fares, including cheap airplane tickets, cheap vacation packages, and discount travel packages remains in dispute.

US Airways argues that the airline mergers since 2008 (including Northwest and Delta in ’08, United and Continental in ’10, and Southwest and AirTran in ’11) created airlines larger that US Airways, making it difficult for airlines such as US Airways and American to compete with their smaller networks. The contention is that the merger of US Airways and American eliminates this competitive disadvantage.

This merger should be complete sometime in the fall and is expected to be the last major merger between major U.S. based airlines for the foreseeable future. Before the merger can be completed the following approvals must be granted:

• Creditors of American must vote no later than July 29th in favor of the merger. American Airlines has been operating in bankruptcy since November of 2011.

• If approved, the bankruptcy court will hold a hearing on August 15th to review the merger.

• If the bankruptcy ...
... court OKs the merger, then the Department of Justice has to determine whether the newly combined airline would violate U.S. trust laws.

The ownership of the merged airlines will be as follows: US Airways shareholders will own 28 percent, with the original American Airlines creditors and shareholders holding the remaining 72 percent.

After the merger is considered closed, another 18 to 24 months will have to pass before the newly merged airline is able to receive its certificate from the Department of Transportation to operate as a single airline and fully integrate its reservations systems, fleets, and other operations.

Some experts believe that the continuing airline consolidation will result in airline ticket prices rising with smaller markets losing service.

US Airways and American today offer overlapping service on only 12 routes. Competitors of the new airline argue that it should give up landing and departure slots at Regan National Airport near Washington, D.C. before the merger is given final approval. US Airways has come out against this request claiming that such a move would likely result in a “loss of service to small communities.”

However US Airways has said that it will make this divestiture if so requested by the Department of Justice so that its merger can be completed.
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