US Airways merges with AMR to create nation’s largest airline

On Thursday, Tempe, Arizona-based US Airways and AMR reached an agreement on terms for a merger between the two major airline companies, a move that will create the largest single airline company in the world. The merger is projected to be worth an estimated $11 billion.

Executives from the US Airways, the fifth-largest airline in the US and AMR-owned American Airlines, the third-largest airline in the US, met in New York City on Wednesday to work out the specifics of the deal. However, before the merger can be completed, it must pass through bankruptcy court since AMR entered negotiations after filing for bankruptcy back in November 2011. The newly formed airline will fly under the US Airlines name and will be centered in the US Airways headquarters in Fort Worth, Texas.

According to CNN Money, US Airways brought in 9 percent of all American air passengers in 2012 while American Airlines held 15 percent of that market. The combined passenger share will easily surpass the current leader, Delta, which drew in 22 percent of all passengers in 2012. The remaining two companies of the now “big four” are United Continental (19 percent) and Southwest Airlines (18 percent). 

The deal is one of a number of mergers between major airline companies in the past decade, including the 2008 deal between Delta and Northwest and the merger that brought together United Airlines in 2010. According to Airlines for America, the deal is the 13th airline merger since 2005.

While the US Airways-AMR merger will bring together two of the biggest names in their market, not all companies need to be A-listers to engage in these sorts or business dealings. Phoenix-based businesses that may be in the mergers and acquisitions market can surely benefit from seeking out small business legal advice before engaging in any sort of negotiations.

Categorised in: Business Law, Contracts & Transactions

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