Switch to Desktop Site

American and US Airways to become the world's largest airline (+video)

Next Previous

Page 3 of 6

About these ads

On Wednesday, the boards of AMR and US Airways approved the $11 billion merger, and an announcement is expected early on Thursday. 

Stars aligned 

A big point in Parker's favor was the fact that American has had difficult labor relations for more than a decade. The pilots union rejected a new concessionary contract last August, in part due to fears that approval would be seen as a vote of confidence in AMR management and undermine the case for US Airways.

The pilots grudgingly approved the contract a few months later, but only after AMR's influential bondholders assured the union that they would not support any restructuring plan unless American remakes its board and management team.

"There's a toxic employee situation at AMR because frankly the employees don't trust their management," said Michael Boyd, an Evergreen, Colorado-based aviation consultant whose firm has worked with Parker.

"From that perspective, you've got labor unions on both sides of this who really would like to see Doug Parker run this larger airline."

Meanwhile, the mega airline mergers in 2008 and 2010 that created today's Delta Air Lines and United Continental Holdings Inc, were increasingly marginalizing both American and US Airways.

Wall Street analysts and investors were almost unanimous in saying that a marriage was the best shot at reversing the fortunes of the two airlines, seen as too small to compete effectively against a Delta or United, and too large to be as nimble as the smaller carriers like JetBlue.

Next Previous

Page 3 of 6