American Airlines and US Airways merge to become world’s largest airline


Photo: PRNewsFoto/American Airlines
Photo: PRNewsFoto/American Airlines

What happens when you add two American mega giant airlines together? The world’s largest airline.

The long rumored American Airlines and US Airways merger is now official. This morning, the companies announced the $11 billion merger that will create the world’s biggest airline, with 6,700 daily flights and annual revenue of roughly $40 billion. The “new” airline will be branded American Airlines, so US Airways will cease to exist.

Here are some factoids I have been able to gather about the merger:

Involved parties: American Airlines and US Airways
New name: American Airlines
Holding company: American Airlines Group Inc.
Ownership Split:  American Airlines Stakeholders will own 72% while US Airways shareholders will own the remaining 28%
Timeline: Deal is expected to be close by 3rd quarter of 2013
Loyalty program/Alliances: Right now, each airline will continue to maintain their own loyalty programs, American Airlines with AAdvantage and US Airways with Dividend Miles. In the future, US Airways will no longer be a part of the Star Alliance and American will retain its oneworld alliance.

What this means for consumers is still a bit fuzzy. There will be more routes available on the new airline because essentially, American will now be flying on the old US Airways routes as well. In terms of costs, fares are not expected to increase, but that, in my opinion, remains to be seen. Less competition could mean higher prices.

In my particular situation, I rarely fly US Airways, but fly American quite a bit. Whenever I do fly US Airways, I use my United Airlines/Star Alliance status to fly them, hence never accruing mileage or loyalty at US Airways. I have always lived in major cities that US Airways didn’t service much (for instance, American Airlines dominated when I lived in Chicago and currently from DC, I have all options, but United is the most sensible when flying from Dulles Airport). What I do wish from this merger is that American Airlines will adopt US Airways’s 4-tier criteria for earning status instead of their current 3-tier criteria. Currently, to earn Gold at AA, you need 25,000 miles, for Platinum – 50,000 miles and a whooping 100,000 miles for Executive Platinum. I fly a lot, but I love to spread my earning across multiple airlines. My strategy has always been to earn high status at all 3 majors – American, Delta and United, so giving just one airline 100,000 miles consistently has been a challenge. I had to really hustle last year for American Airlines while also trying to achieve high status for Delta and United. While I was successful, I would love to see a third tier added at 75,000 miles. This will set a realistic target to aim for each year.

Are you excited for this merger? What things would you like to see in the new airline?

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