If approved by regulators, the American Airlines and U.S. Airways merger would create the world’s largest air carrier. Photo by Mike Theiler/Reuters.
The boards of American Airlines and U.S. Airways voted late Wednesday for an $11 billion deal to merge the two carriers. The result would make the combined airline — retaining the name American Airlines — the largest in the world.
While antitrust regulators still need to approve the deal, the merger would reduce the number of major U.S. airlines to four and allow the airline to best its biggest competitor, United, in some key areas.
The airline industry has seen major changes over the last several years. According to MIT’s Airline Data Project, American Airlines was the revenue leader in 2007. But then a couple of mergers followed — Delta and Northwest Airlines in 2008, and United and Continental Airlines in 2010 — that saw American Airlines’ lead slip. When comparing total revenue in 2011, American trailed United and Delta as the third biggest airline in 2011.
But according to the Wall Street Journal, the combined 2012 revenues of American and U.S. Airways of $38.7 billion would narrowly beat United’s $37.2 billion, making the new American the top major U.S. airline.
US Airways CEO Doug Parker (L) and American Airlines President and CEO Tom Horton join together during a news conference at Dallas/Fort Worth International Airport. Parker will run the new airline, while Horton will be a nonexecutive chairman for a limited time. Photo by Tim Sharp/American Airlines via Reuters.
Airlines also measure the number of available seat miles (ASMs) that generate revenue, a metric in deciding an airline’s capacity for carrying passengers. With this merger, the combined total number of ASMs is more than 254 billion for the new American. United reported 216 billion ASMs for 2012.
The merger would make the airline’s operation slightly bigger than United’s as well. Including regional affiliates, the combined fleet of American and U.S. Airways would be 1,522 planes, topping Delta’s fleet of 1,289 planes, the Wall Street Journal reported. The merger also has an employee count of 120,000, while the total number of employees at United is almost 87,000.
US Airways and American Airlines have some ground to gain in terms of net income. In 2012 the two airlines combined for a loss of 1.2 billion. Last year, Delta made a billion dollars and United lost $723 million.
The Douglas DC-3 revolutionized the air transportation industry when American Airlines introduced it in 1936. Built at the request of American’s president C.R. Smith, the DC-3 was the first airliner able to operate at a profit carrying only passengers. Photo by Time Life Pictures/Getty Images.
Robert Herbst, an independent airline industry consultant, anticipated the American-US Airways merger and said the move would prove beneficial in the long run.
“History shows a long list of once great airlines that failed,” he said in his report from last year. “Each of those failed airlines had one thing in common. They all failed to remain competitive.”