American Airlines parent AMR Corp and US Airways sealed their $18
billion merger on Monday. Shares of the carrier are trading on
Nasdaq under the symbol "AAL."
"We will now have a network that can get customers everywhere they
want to go. Because of that, we have more ability to compete for
corporate customers," said Scott Kirby, the former president of US
Airways who has that role at the new American.
Corporate customers can spend three times as much as leisure
travelers, making them a lucrative segment for airlines. Kirby said
corporate accounts could bring in "hundreds of millions of dollars."
Kirby said New York was a prime example of an area where American
could make corporate customer inroads and compete better with rivals
such as Delta Air Lines <DAL.N>, which offers an international
network as well as domestic shuttle service for business passengers.
The combination will enable the new American Airlines to combine the
former American's international route map with US Airways' shuttle
service, Kirby said. "We'll now eliminate that competitive advantage
and be on a level playing field with both Delta and United competing
for corporate customers," Kirby added.
At its Fort Worth, Texas, headquarters, American marked the merger
completion with a ceremonial bell-ringing to open trading on Nasdaq.
"American has a tremendous legacy and knows what it feels like to be
the best," Chief Executive Doug Parker, who had held that title at
US Airways, said. "The new American is about getting that feeling
American Airlines, once the largest U.S. carrier, had fallen to
third place behind United Continental Holdings and Delta, both of
which used Chapter 11 to cut costs. For years, American's higher
cost structure had put it at a disadvantage.
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"In order to compete satisfactorily with Delta and United, it needed
the additional destinations and the additional frequency that US Air
will bring it," Robert Crandall, the former AMR Corp CEO who
attended the Dallas event at Parker's invitation, said in an
AMR declared bankruptcy in November 2011, citing high labor costs,
and eventually reached cost-saving contracts with its three primary
unions, including its pilots, after bitter negotiations. Parker
reached agreements with American's biggest unions to secure their
support for his merger pursuit.
The new American Airlines Group has annual revenue of about $39
billion based on 2012 figures. It has a solid presence on both U.S.
coasts and on North Atlantic routes, given American's
revenue-sharing joint venture with British Airways and Iberia (ICAG.L).
The new carrier has hubs in Dallas-Fort Worth, Miami, New York,
Chicago, Los Angeles, Phoenix, Washington, Philadelphia and
Charlotte, North Carolina.
(Reporting by Karen Jacobs in Dallas;
editing by Richard Chang)
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