Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Us Airways-American Deal near Announcement of Airline Merger Likely This Week

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Us Airways-American Deal near Announcement of Airline Merger Likely This Week

Article excerpt

After months of negotiations, American Airlines and US Airways appeared likely to announce a merger this week that would create the nation's biggest airline and concentrate even further a once- fragmented industry.

A merger would expand American's domestic network, particularly in the Northeast and the Southwest, and create a more formidable competitor internationally. The combined airline would jump ahead of United Airlines and Delta Air Lines, both of which have grown through mergers of their own in recent years.

The combination would probably bring to an end the wave of consolidation that has swept the industry in recent years. Since 2001 there have been five large mergers, reducing the number of airlines to three main carriers, a handful of low-cost carriers like Southwest Airlines and JetBlue, and regional carriers.

These mergers have led to cuts in service to many smaller cities around the country, including Pittsburgh, which was a onetime hub for US Airways. But they have also created healthier and more profitable airlines that are able to invest in new planes and products. Faced with rising fuel costs, and losing tens of billions of dollars in the last decade, airline executives argued that the only way to survive was to consolidate capacity.

American, which has been in bankruptcy protection since November 2011, is currently the nation's third-largest airline with domestic and international flights; US Airways is the fourth.

The boards of both carriers are expected to meet sometime this week to approve the combination, which then needs to be approved by a bankruptcy judge in New York City. A deal could be struck this week or possibly next week as talks are still ongoing.

A tie-up also requires the approval of federal regulators and antitrust authorities. But analysts expect regulators to approve the deal since there is little overlap between the two networks and no hubs in the same cities.

Even if the deal clears all these hurdles, the merged airline still faces a host of challenges. …

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