Done deal: US Airways, American complete merger

Finally, it's a done deal.

American Airlines AMR Corp. and US Airways Group Monday officially announced the completion of their merger to form American Airlines Group Inc., the world's largest airline.

At 7:40 a.m., the secretary of state in Delaware, Jeffrey Bullock, filed a certificate of merger. The new company is incorporated in Delaware.

US Airways CEO Doug Parker, who will lead the new American, will ring the opening bell on the Nasdaq stock market at 9:30 a.m. eastern time, signifying the the opening of trading of the new American's shares on Nasdaq. Ticker: AAL.

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"After today's celebration, the real work begins," Parker said in a message to employees. "These include integrating our networks, combining our frequent flier loyalty programs, and achieving a single operating certificate."

The new American will be based in Fort Worth, Tex. and have 6,700 daily flights to more than 330 destinations in more than 50 countries, and more than 100,000 employees.

About 6,600 US Airways employees are based in Philadelphia. The combined airline says it will keep nine U.S. hubs, including Philadelphia.

It will take months - and up to two years - to blend frequent flier programs, aircraft fleet, workforces, paint planes, and integrate computer reservations systems.

The biggest challenge will be avoiding the computer glitches that snarled passenger bookings and flight reservation systems after the 2010 merger of United and Continental airlines.

In the short term, both companies will continue to operate separate websites and flight schedules.

Customers will start to notice changes in early January, when the American Airlines code will be put on all US Airways flights, and fliers can go to American Airlines.com and book any US Airways or American flight. US Airways frequent fliers will be able to use their earned miles to book flights on American and so called "elite" customers - the most frequent of fliers who are in "chairman preferred" status - will have waived bag fees on American, starting Jan. 7, as they did on US Airways, said American's new president Scott Kirby.

"While we will have reciprocity and recongition, we will still have different upgrade programs and lists," Kirby said in an interview. "It will be at least a year before the accounts will roll into one frequent-flier account."

Management expects $1 billion in merger efficiencies and revenue through cost savings by 2015.

Parties for airline employees were held in all nine hubs Monday.

Before the two airlines can fully merge, the Federal Aviation Administration must grant American a single operating certificate, and that will likely take until the end of 2015, Kirby said.

On March 31, 2014, US Airways will officially join the "oneworld" global alliance, led by American and British Airways, which allows passengers to book flights anywhere in the world on the oneworld partner airlines.

How smoothly airlines combine operations "comes down to three things - labor, management and information technology," JP Morgan Chase airline analyst Jamie Baker wrote in a recent client note.

In the Delta-Northwest airlines merger in 2008, the pilots were on board and cooperative, but unionization efforts for mechanics and flight attendants "proved time consuming and distracting," Baker said. Meshing Delta and Northwest's technology and reservation systems went smoothly, he said.

In the United-Continental merger in 2010, combining the reservation and ticketing systems "proved extremely challenging."

In the case of US Airways and American, labor has been supportive and "wages are largely known," Baker wrote.

US Airways management, who will run the new American, "has done this before. American's integration prospects appear better than average in our view," Baker said.

Doug Parker, 52, began pursuing the merger soon after American parent AMR Corp. filed for bankruptcy protection in November 2011. The airlines announced an agreement to merge in February, and worked toward a September closing when the U.S. Justice Department, on Aug. 13, filed an antitrust lawsuit to block the deal.

A settlement with the Justice Department was announced Nov. 12. U.S. Bankruptcy Judge Sean Lane approved American's reorganization plan, including the merger, on Nov. 25.

Source: Philly.com