Rivals American, US Airways forming merger

February 7, 2013 5:07:45 AM PST
American CEO Tom Horton wanted to fly out of bankruptcy solo. Sources say his US Airways counterpart will be at the controls of the new airline.

Sources tell WFAA-TV in Dallas the decision could be made Monday and an announcement will come Tuesday. It's all up to the AMR whether to merge, who runs the company and what it might mean to passengers.

After more than a year of talks, sources say American Airlines and US Airways will likely announce a merger agreement next week.

"The economics make so much sense. They're so compelling that I think the creditors and the boards of both companies said, 'Let's get this done; it will be good for everybody," said Mark Drusch, analyst and former airline executive who has watched these talks develop.

AMR's board will formally consider a merger for the first time Monday. Officially, American said it does not discuss and will not confirm a board meeting next week.

American Airlines will remain the name of the new airline. Company headquarters will stay in Fort Worth. But who leads the combined company remains unsettled.

Sources say US Airways CEO Doug Parker will likely take over. And American's Horton, who labor unions oppose, might only get an honorary position on the board.

"Here's the conundrum the board is faced with. Again, if the unions are really digging in saying we don't want Horton around, the board has to decide 'Is Horton important enough to keep around to potentially suffer labor disharmony through a merger?'" Drusch said.

Drusch said in the long term, fares would likely rise. And even if American decides to merge with its smaller rival next week, it is doubtful passengers would see any change for months.