American Airlines merger expected next week

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by JASON WHITELY / WFAA

WFAA

Posted on February 7, 2013 at 9:10 AM

Updated Thursday, Feb 7 at 9:11 AM

DALLAS – After more than a year of talks, a merger between American Airlines and US Airways will likely be announced next week, sources tell WFAA.

"The economics make so much sense. They're so compelling that I think the creditors and the boards of both companies said 'let's get this done it will be good for everybody," said Mark Drusch, an executive with Fareportal, who also held high-ranking positions with Continental, Delta and Lufthansa.

The board of directors of AMR Corp., American's parent company, will meet on Monday to consider a combination, WFAA has learned.

Officially, American tells us it does not discuss and will not confirm a board meeting next week.

But it’s no secret that both airlines have been swapping financial information over recent months to see if a merger made sense.

Currently at issue is which executive team will lead the new company.

Sources tell WFAA that US Airways CEO Doug Parker will likely take over, and AMR CEO Tom Horton will be given an honorary position on the board such as non-executive chairman.

American’s labor unions, which have long pushed for a merger with US Airways, have publicly stated they don’t want American’s management running the new company.

"Here's the conundrum the board is faced with,” Drusch explained. “If the unions are really digging in saying we don't want Horton around the board has to decide 'Is Horton important enough to keep around to potentially suffer labor disharmony through a merger."

Teams from both airlines are currently collaborating on how to make the merger announcement and where it will take place, sources said.

The new company will be based in Fort Worth, but led by the smaller airline, which is currently headquartered in Phoenix. The combined carrier is expected to retain the American Airlines name.

In January, Horton said an announcement about the future of American would be announced soon. The two airlines have been in official talks for months.

Weeks later, American debuted a new logo and paint scheme for its aircraft. At the time, Horton said he did not expect to have to change the livery again if a merger came to fruition.

Drusch predicted fares would increase in the long-term and even if American decides to merge with its smaller rival next week it's doubtful passengers would see any change for months.

The US Airways board would still have to consider a merger, along with creditors, American’s bankruptcy judge, the U.S. Department of Justice and even the European Union before the two companies would ever become one.

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