U.S. Airways Merger With American Appears Likely, $14 Billion Deal In The Works To Become Largest Airline
Submitted by News Desk 2 on Mon, 03/12/2012 - 22:32
Phoenix, AZ -
As previously reported here at TFNJ, rumors of U.S. Airways acquiring American Airlines are starting to increase and a recent spat of domain name purchases using the two companies combined name by an unknown entity could suggest the merger is a done deal.
On Jan, 20th, we reported the terms of the deal of a possible merger which would be worth about $14 billion in a stock and cash deal and assumption of American's debt. U.S. Airways would also cancel deliveries of many of American's outstanding orders for new aircraft and continue American's retirement of older planes such as the MD-88's. As part of the process, American would also cut about 5% of its route network, mostly to smaller airports.
The new airline, if the to merge, would become the world's largest airline with 936 aircraft and 392 destinations. This would put it slightly ahead of United which just became the world's largest airline as a result of the merger with Continental Airlines.
U.S. Airways lacks important hubs on the west coast or in the central part of the nation which has resulted in less than desired growth for the airline according to some industry analyst.
American Airlines is currently in bankruptcy and just recent received an extension as it continues to shed high cost labor contracts and other uneeded assets.
Also as part of the deal, U.S. Airways would eliminate American Eagle and make it survive on it's own merits and put out bids in many regional cities for new capactiy agreements.