American, US Airways in merger talks – Chicago Tribune

Posted: September 5, 2012 in Uncategorized

Airline behemoths United Airlines and Delta Air Lines could be joined by a third megacarrier, as talks to merge American Airlines and US Airways heated up heading into the Labor Day weekend.AMR, parent of American Airlines, and US Airways Group announced Friday that they signed a nondisclosure agreement and would exchange confidential information in an effort to merge their companies.Ads by Google Cheap Business Class SeatFly International Business Class Pay Less Than Everyone Else http://www.flybusinessforless.com/ Southwest Airlines® VisaHurry, Earn 2 Roundtrip Flights & Double Points On SWA Purchases. CreditCards.CHASE.com/SouthwestA merged airline would have complementary route networks and achieve the scale necessary to compete head-to-head with the largest carriers, US Airways officials have said.For consumers, the impact of a American-US Airways combination might not be beneficial.”It is pretty clear that a smoothly executed merger — a historical coin flip at best — would probably create a stronger business entity,” said Rick Seaney, CEO of FareCompare.com. “Unfortunately for passengers, we would likely see an acceleration in the current trend in reduced choice, packed planes and higher ticket prices, albeit finally on newer aircraft.”The nondisclosure agreement with US Airways means the companies won’t be providing more information regarding the status of discussions until there’s a deal or they call off talks, the airlines said.The airline companies said they would work in “close collaboration” and “good faith” to evaluate a merger, including working with the creditors committee of AMR, which filed for bankruptcy protection in November.The companies noted that there’s no guarantee that a merger will result.American, the No. 2 airline in the Chicago region after United, also said it signed nondisclosure agreements with other parties but would not say with whom.Reportedly, one is with the parent company of British Airways, International Airlines Group, which potentially seeks to buy a stake in American Airlines, according to the Associated Press. It can only buy a stake and not the whole company because foreign entities by law can control only 25 percent of a U.S. airline.However, analysts have said the most likely candidate would be US Airways.AMR CEO Tom Horton has long insisted the company was not interested in a merger while it was restructuring, saying it was too complex to do both.Meanwhile, US Airways CEO Doug Parker aggressively and publicly campaigned for merger talks.”I think it would be tremendously unwise to get distracted with talk of combination inside a restructuring,” Horton said in March.However in July, Horton said the company had “greater clarity on our revenue outlook and cost structure” and would begin evaluating strategic options, including mergers.In a letter Friday informing American Airlines managers about the non-disclosure agreement, the company said, “This will be an objective, thorough, fact-based process. Although we will proceed with these discussions in good faith, there can be no assurance that any transaction will take place.”

via American, US Airways in merger talks – Chicago Tribune.

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