American-US Airways merge to create world's largest airline

American Airlines

The boards of AMR Corp and US Airways Group Inc each met on Wednesday to approve a merger that would create the world's largest airline with an expected market value of around $11 billion, people familiar with the matter said.

The all-stock merger, which is set to be announced early on Thursday, would finalize the consolidation of legacy U.S. air carriers that helped put the industry on a more solid financial footing.

AMR's bankruptcy creditors will own 72 percent of the combined airline, which will do business under the American Airlines brand and be based in Fort Worth, Texas, the people said. US Airways shareholders will own the rest.

The board approval came after AMR's unsecured creditors committee, which includes all three of AMR's major unions, met earlier on Wednesday to approve a proposed merger agreement, the people said.

The merged company will have a board of 12 members: four from US Airways including its chief executive Doug Parker, three from AMR including chief executive Tom Horton and five to be designated by the AMR creditors, two of the people said.

That will shrink to 11 members in 2014 after Horton steps down following the combined company's first annual meeting, the person added. Parker becomes chief executive of the new airline.

AMR's unsecured creditors are expected to be made whole on their claims in the form of stock in the merged company and also get accrued interest, the people said.

AMR's shareholders will get a small equity stake as well, they added.

All the sources asked not to be named because the matter was not public. US Airways declined to comment while AMR representatives could not be immediately reached for comment.

The deal comes more than 14 months after the bankrupt parent of American Airlines filed for bankruptcy in November 2011, and would mark the last combination of legacy U.S. carriers, following the Delta-Northwest and United-Continental mergers.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.