US Airways-American merger: What does it mean for you?
American Airlines and US Airways received federal approval to merge on Tuesday, creating the world's largest airline. American and US Airways will have to give up slots at popular airports, but it's not clear those concessions will be enough to keep the cost of flying from going up.
Susan Walsh/AP Photo/File
Meet US Airways' new travel buddy: American.
After months of debate, The Department of Justice (DOJ) reached a settlement with US Airways and American Airlines Tuesday that will allow the two companies to merge and become the worldâs largest airline.
The merger has not been smooth for either company. The deal, first announced in February, was originally expected to be closed by the end of the third quarter but was delayed due to a DOJ antitrust lawsuit that claimed the merger would "result in passengers paying higher airfares and receiving less service.â The settlement came just two weeks before the scheduled trial.
Though the merger still needs approval from the US Bankruptcy Court, the companies donât expect any obstacles, according to American Airlines parent company AMRâs announcement of the settlement. The merger would pull American out of two years of bankruptcy.
The combined company will operate under the American Airlines name and is being referred to as the "New" American Airlines by the companies. The $11 billion merger is now expected to be completed by December, according to AMR.Â However, the airlines donât expect to complete the transition to a single carrier for the next five years. Â
Here's how the merger will likely affectÂ airline passengers:
Do you fly American or US Airways and live in Washington, D.C., or New York? Expect the airlinesâ presence to decrease at these airports. The centerpiece ofÂ the DOJâs settlement was that the merged company would have to give up carrier slots, gates, and ground facilities at the nationâs key airports so as to maintain competition. The airlines must divest all 104 slots at Washington Ronald Reagan National Airport, 34 at New Yorkâs LaGuardia Airport, and smaller divestitures at the Los Angeles, Boston, and Miami airports.
Do you fly JetBlue or Southwest or Delta?Â Jet Blue and Southwest may expand.Â Since the new American will be forced to sell carrier slots and gates, they'll be up for grabs for the other airline giants. According to the settlement, JetBlue at Reagan National and Southwest at LaGuardia will be given priority to the slots they currently lease from American. Though the airlines have not yet announced plans to buy these slots, Wall Street was enthusiastic. JetBlue stocks is up nearly 13 percent since Monday's close and Delta and Southwest shares are up 3.3 percent and 1.8 percent, respectively.
Are you a frequent flier? US Airways and American Airlines are part of separate loyalty programs. If youâre already an American Airlines loyalty member, nothing changes. If youâre part of US Airwaysâ Dividend Miles program, however, youâll be transitioned to the AAdvantage loyalty program, US Airways CEO W. Douglas Parker told The New York Times. You wonât lose your miles, but theyâll be redeemable at different airlines.
Will you pay more money? A big concern of the DOJ was the impact of the merger on the cost of flying. The concessions the airlines made are intended to reduce their pricing power at certain airports. Time will tell whether those moves will be enough to keep prices down. The competition is shrinking, however. In the 1970s, 12 airlines ruled the skies. Upon completion of this merger, just four airlines will rule 85 percent of the domestic market.Â