In Brief: US Airways Formally Proposes Merger with American Airlines



We’ve seen it coming for many months now, but reports are that Tempe, AZ-based US Airways has formally solicited Dallas-based American Airlines to merge. The report has surfaced after many months of speculation about a merger. US Airways had previously signed a non-disclosure agreement (NDA) that allowed them to view American’s books.

The all-stock deal would see American’s creditors receiving 70% of the new company’s shares, while US Airways shareholders would receive 30%. The new company would be based in Dallas and be called American, though US Airways’ chief executive Doug Parker would head the combined airline. Parker estimates the combined airline’s worth at $8.5 billion, exceeding a $6.8 billion valuation of United Airlines and falling just short of Delta Air Lines’ $8.6 billion valuation (Though, personally, we believe that Parker is pulling some of these numbers numbers out of thin air -Ed.)

While American’s labor unions have previously rallied for the deal, American and its sole pilot union, the Allied Pilots Association, recently signed a tentative agreement following months of bargaining and disruptive action by pilots. The APA maintains that “[APA] leadership continues to support a merger with US Airways as the best path to a stronger, more competitive American Airlines that will in turn enhance our pilots’ long-term career prospects.” (The choice of words is interesting, though. The release specifically says APA “leadership,” not specifically the pilots themselves. It has been suggested in the past that American’s pilots have supported a merger only as an expression of displeasure towards management -Ed.)

There is an interesting discussion going on over at about the status of the merger, and some pretty valid points being brought up for/against both sides of the argument. We’d say it’s worth a read.