World’s largest airline approved: AA and US Air are merging
The merger of American Airlines and US Airways is now a go and authorized by the US Department of Justice. This was announced Tuesday.
The merger of American Airlines and US Airways is now a go and authorized by the US Department of Justice. This was announced Tuesday. In the settlement the two carriers agreed to give up landing and takeoff slots and gates at key airports, notably Washington’s Reagan National and New York’s LaGuardia. With the agreement, the government hopes to increase access to the nation’s busiest airports for low-cost airlines and to maintain flights to smaller cities.
What does the merger mean for other US airlines
UNITED AIRLINES, DELTA AIR LINES
Currently the two largest airlines in the world, United and Delta will face increased competition from the combined American and US Airways, which will be slightly larger. The newly combined airline will serve more cities, with easier connections than American or US Airways individually offer.
Delta has been aggressively picking up lucrative corporate contracts, expanding in New York, Los Angeles and Seattle. American’s improved route network will make it harder for Delta to steal away additional business.
Delta said Tuesday that it would like to acquire additional slots at Washington D.C.’s Reagan National Airport. But the government isn’t likely to allow that. When asked about Delta’s interest in those slots, Bill Baer, who heads the DOJ’s antitrust division, said: “We see legacy carriers as part of the problem.”
United has had a bumpy time implementing its merger with Continental. It has a stronger network to places like Asia. But thanks to American’s bankruptcy court restructuring, United now has a higher cost structure.
Southwest has aggressively added flights to cities abandoned by larger airlines. If the new American cuts flights out of a city like Phoenix, Southwest could try to get a stronger position there. Phoenix is already the fifth largest city in its network, by originating passengers.
Southwest will be allowed to permanently keep 10 landing and takeoff slots that it currently leases from American in New York. It can also join in a bidding process for more slots there and in Washington, D.C.
American will also have to give up its gates at Dallas Love Field, further strengthening Southwest’s overwhelming presence there. The airport close to downtown Dallas will become much more desirable next year when restrictions on which destinations carriers there can serve nonstop are removed.
New York-based JetBlue has a close relationship with American, and both airlines have big operations at Kennedy Airport. But JetBlue is now trying to compete with the other airlines for high-paying first class travelers between New York and California.
JetBlue will be allowed to permanently keep 16 landing and takeoff slots that it currently leases from American in Washington D.C. It can also join in a bidding process for more slots there and in New York.
Alaska’s core territory is flights up and down the West Coast, and even the merged American will still trail Delta and United in that part of the country. But Alaska does have a lessor relationship with American, feeding some flights to the region.
The low-cost airline will now face stronger competition on its lucrative Caribbean routes. However, it is aggressively expanding into large cities like Houston, Orlando, Detroit, Denver and Dallas. If American, Delta, Southwest and United raise fares in those cities, more passengers might flock to Spirit. It could also bid for some slots that open up in Washington and New York.
The airline has a heavy debt load and loses money. The merger could amplify Virgin’s struggles to lure business travelers. However, more leisure travelers looking for an alternative flying experience might be attracted to Virgin. It might also seek slots in Washington and New York.
1930: American Airways Inc. is incorporated. The name changes to American Airlines Inc. in 1934.
1937: American carries its one-millionth passenger.
1939: The company’s shares begin trading on the New York Stock Exchange.
1945: Flights to Europe begin under the American Overseas Airlines brand. AOA later merged with Pan Am.
1948: The airline offers scheduled coach service at lower prices than first-class.
1953: American began nonstop, coast-to-coast flights on the Douglas DC-7.
1959: American offers transcontinental jet service on the Boeing 707.
1977: American introduces the “Super Saver” fare.
1979: The airline moves its headquarters from New York City to Fort Worth, Texas.
1981: The AAdvantage frequent-flier program is born and eventually becomes the model for loyalty plans at other big airlines.
1982: Shareholders approve a reorganization plan that creates parent AMR Corp.
1985: Robert L. Crandall becomes chairman and CEO.
1991: American carries its one-billionth passenger.
1998: Crandall retires and is succeeded by Donald J. Carty.
1998: American acquires low-cost Reno Air; pilots later conduct a costly sickout in protest.
2001: American acquires assets of bankrupt TWA; the deal eventually leaves American saddled with old planes and too many employees. On Sept. 11, two American Airlines jets and two United Airlines jets are hijacked by terrorists and crash.
2003: With the company on the brink of bankruptcy, Gerard J. Arpey replaces Carty as CEO; labor unions approve cost-cutting contracts that let AMR avert bankruptcy.
2008: American fails to reach new contracts with union employees, who continue to work under terms of previous agreements.
2009: American announces “cornerstone” strategy of focusing on five big U.S. markets Dallas-Fort Worth, Chicago, Miami, New York and Los Angeles while downplaying others.
2010: AMR reports a loss of $471 million, bringing total losses since 2001 to more than $10 billion.
2011: AMR, American Airlines and other subsidiaries file for bankruptcy protection on Nov. 29, a day after Arpey retires and is replaced by Thomas W. Horton.
Feb. 1, 2012: American tells workers that it plans to cut 13,000 union jobs, mostly in the maintenance division; the number is later reduced sharply.
April 20, 2012: US Airways announces that it has reached labor agreements with all three of American’s unions on contracts that would take effect in case the two airlines merge.
July 10, 2012: Horton, who had resisted US Airways’ merger overtures, says AMR has made enough turnaround progress to now consider merger options.
Aug. 31, 2012: American announces that it has signed an agreement to exchange confidential financial information with US Airways so that the two can study a potential merger.
Sept. 4, 2012: A federal bankruptcy judge reverses his earlier ruling and lets American cut pay and benefits for pilots, who had rejected the company’s last contract offer. The decision is followed by a surge in canceled and delayed flights, which American blames on an illegal work slowdown by pilots.
Oct. 2, 2012: American and the Alllied Pilots Association agree to resume contract talks; all other union groups have accepted cost-cutting contracts.
Feb. 13, 2013: The boards of American and US Airways approve a merger creating the world’s biggest airline. The deal is publically announced the next day.
Nov. 12, 2013: American, US Airways and the DOJ announce a settlement to the suit, requiring the airlines to give up takeoff and landing slots at Reagan National and LaGuardia airport.