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American-US Airways merger moves forward

Published By United Press International
DALLAS, Feb. 14 (UPI) -- The boards controlling American Airlines and US Airways green-lighted an $11 billion merger to be announced Thursday that creates the world's largest airline.

The morning announcement, which the Fort Worth (Texas) Star-Telegram said would be held at American Airlines' Admirals Club at Dallas/Fort Worth International Airport, would create a combined airline with 94,000 employees, 950 planes, 6,500 daily flights, eight major hubs and total sales of nearly $39 billion.

The carrier, expected to be called American Airlines, would be based in Fort Worth, where current bankrupt American parent AMR Corp. has its headquarters.

Its hub airports, used as transfer points, were expected to combine American's hubs in Dallas, Miami, Chicago, Los Angeles and New York and US Airways' in Phoenix, Philadelphia, Ronald Reagan Washington National Airport outside the District of Columbia, and Charlotte, N.C.

The new American -- taking the No. 1 spot from United Airlines, which merged with Continental Airlines in 2011 -- would be the market leader on the U.S. East Coast and Southwest and in South America but would remain a lesser player in Europe than United and Delta Air Lines, The New York Times said.

The merger was not expected to significantly strengthen the new American's presence in Asia, where it would trail United and Delta, the Times said.

If the merger is approved, American, United, Delta and Southwest Airlines would control 87 percent of the domestic U.S. airline market, Airline Weekly analyst Seth Kaplan told USA Today.

Delta absorbed Northwest Airlines in 2008. Southwest, the world's largest low-cost carrier, bought AirTran Airways in 2011.

The American-US Airways merger still needs to pass several steps. It must be approved by American's bankruptcy judge in New York, US Airways stockholders and the U.S. Justice Department's antitrust division.

Analysts said they expected regulators would clear the deal, although they might require the combined airline to give up slots at Washington National. Slots are the right to schedule a landing or departure during specific time periods.

"I expect that the regulators will force a combined American-US Airways to divest themselves of some of the slots, and competitors would be free to compete for those available slots," William Swelbar, a researcher at the MIT International Center for Air Transportation, told The Washington Post.

He said Southwest and JetBlue would likely show particular interest in grabbing more passenger share at National.

Under the all-stock deal, American's creditors would own 72 percent of the combined airline, and US Airways shareholders the balance, The Wall Street Journal reported.

US Airways Chief Executive Officer Doug Parker would run the combined company as chief executive. AMR CEO Tom Horton would be non-executive board chairman, probably until the spring or summer of 2014, when the new company is expected to hold its first annual meeting after American emerges from bankruptcy protection, the Journal said.

The AMR and US Airways Group Inc. boards approved the merger late Wednesday in separate New York meetings with their respective legal advisers, the Journal said.

The merger has the backing of key American creditors, which is expected to smooth the way for bankruptcy-court approval.

Lawyers for American and its creditors were to appear in bankruptcy court Thursday to discuss the merger and request a time extension to propose a reorganization plan, the Journal said.
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Race winner Bradley Wiggins of Great Britain (C) stands between second place finisher Christopher Froome of Great Britain (L) and third place finisher Vincenzo Nibali of Italy on the presentation podium following the final stage of the Tour de France in Paris on July 22, 2012. Wiggins of Great Britain became that country's first ever overall winner of the Tour de France. UPI/David Silpa