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American, US Airways link makes largest carrier


February 14. 2013 8:10PM
A US Airways plane is parked between two American Airlines planes, one bearing the new logo, at left), and the old logo , at right. American Airlines CEO Tom Horton and US Airways CEO Doug Parker announced the merger of the two airlines during a news conference at Dallas-Fort Worth International Airport Thursday. (MCT)

American Airlines and US Air on Thursday unveiled an $11 billion merger deal after months of negotiations, creating the world's biggest airline with 6,700 flights a day.

Now comes the hard part. Before they can welcome their first passenger onboard they have to get regulators to sign off on a deal and then integrate a web of intricate systems - a process that has complicated other marriages in the airline industry.

"So far it's just been pushing paper," said Robert Mann, head of R.W. Mann & Co of Port Washington, N.Y., which provides industry consulting and analysis. "The next 18 to 24 months is the hard work of implementation."

In addition to integrating the two companies' unionized labor forces, they will need to meld together infrastructure, IT, real estate and commercial systems, he said.

Integrating the airlines' reservations systems is a big challenge, said Basili Alukos, a Morningstar airline analyst. He said the previous US Air and America West merger was "one of the worst" integrations in the industry, but that US Air has likely learned from that experience.

US Air Chief Executive Doug Parker, who will head the newly merged company, said his experience with America West was a plus.

"Integrating airlines can be difficult sometimes, but we've (already) done one at US Airways," he said. "We know what to do and know what mistakes to avoid."

Labor integration could also be a challenge for the new American, where union representation issues will need to be resolved.

The deal, subject to approvals from U.S. and European regulators and the U.S. Bankruptcy Court, gives creditors of the bankrupt American Airlines parent control of the combined airline.

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