After months of rumors and rumblings, US Airways and American Airlines have released details of a merger that will make the new carrier the largest in the world.
According to a press release Thursday morning, board members from both airlines approved an $11 billion deal, based on the price of US Airways stock from Wednesday.
The new company will carry the American Airlines name.
"On behalf of the citizens of Charlotte, who have made significant investments in our thriving international airport, I want to congratulate US Airways and American Airlines on completing perhaps the most important merger in the history of the airline industry, Charlotte mayor Anthony Foxx said on Thursday morning.
"We believe this merger will be good for our economy and look forward to dialogue with the newly combined company's leadership in the coming days."
North Carolina Governor Pat McCrory says the American-US Airways merger is great news for North Carolina.
"The deal could connect our state to more destinations worldwide, increase travel and economic activity around one of the world's most important transportation hubs, and help us create jobs," McCrory said on Thursday. "I am excited and supportive of the plan and wish both companies luck in seeing the deal through to the end."
What it means for customers
The combined airline will offer more than 6,700 daily flights to 336 destinations in 56 countries.
The new American Airlines will maintain all of the hubs currently operated by both companies, including the US Airways hub in Charlotte. American has hubs in Miami, New York-JFK, Chicago O'Hare, Dallas-Fort Worth and Los Angeles. In addition to Charlotte, US Airways focuses it hub operations in Phoenix and Philadelphia.
Both companies will also integrate their regional carries into the new company, in an effort to enhance their performance and fleet. American owns American Eagle. US Airways owns Piedmont and PSA.
The new carrier has put in orders for more than 600 Boeing-made aircraft. 517 will be narrowbodied. 90 will be widebodied, designed for international travel. Most of the aircraft will be equipped with advanced in-seat entertainment systems. Features include thousands of hours of programming, in flight Wi-Fi that works worldwide and "Main Cabin Extra" seating with 4-6 inches of additional legroom in the Main Cabin.
Another plus? US Airways announced Thursday, customers' frequent flier miles will transfer once the merger is final.
That's good news to Christina Cutlip, a loyal US Airways customer.
"I have some trips planned outside the country this year so I'll be able to use both miles which is fantastic," she said.
Without the roll over, Cutlip may have been tempted to take her business elsewhere.
"I probably would have been flying United a little bit more than I would fly US Airways because then I could get my upgraded status on United rather than US Airways," she said.
The new ownership
Current US Airways Chairman and CEO Doug Parker will head the new company. American Airlines CEO and Chairman Thomas Horton will serve as chairman of the new company, through its first stockholder meeting. After that, Parker will take over as CEO. Horton will also serve as the combined airline's representative to the oneworld Alliance. He is the current chairman of that entity. Horton will also represent the company in the International Air Transport Association. Similar to the new position of Chairman, Horton will relinquish these positions after the first stakeholder meeting.
The company's new board of governors will be made up of 12 positions. Three will be American Airlines representatives, including Horton. Four will come from US Airways, including Parker. The other five will be made up of creditors from American Airlines.
American stakeholders will own 72 percent of common stock. US Airways shareholders will stake claim to the other 28 percent.
Parker shared a message for the employees of both US Airways and American Airlines.
"This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees. We are grateful to have the support of both companies' unions and thank them and their leaders for their hard work and vision. We look forward to a bright future for our employees and enhanced service and choice for our customers. With today's announcement, we start becoming one team and one new airline," Parker said.
Horton expressed confidence about the state of the newly-formed company.
"The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available. The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability," Horton said.
Timeline for formation of the new company
The merger was partially sought due to American Airlines Chapter 11 bankruptcy filing. That filing still needs to be approved by federal regulators. The new company is also subject to approval of federal anti-trust laws. Experts say it could take several years before the new American Airlines is fully integrated.
Charlotte Chamber President Bob Morganm released the following statement: "Jerry Orr, our Aviation Director, has long suggested that a US Airways/American merger will be good for Charlotte. We are most excited about the global reach that American brings to this combination. Their broad network will significantly expand Charlotte's connection to the rest of the world. This will be good for our businesses and economy."
(RNN) - Over the past 10 years, the airline industry has undergone a renaissance. In the wake of 9/11, airlines have had to reinvent the way they operate. And in order to optimize their profits, they'veFull Story >
The airline industry evolved since 9/11 to protect itself against a harsh economic climate. However, some of the changes come at a great cost to consumers.Full Story >