American, US Airways Announce Merger
RENEE MONTAGNE, HOST:
This is MORNING EDITION, from NPR News. I'm Renee Montagne.
LINDA WERTHEIMER, HOST:
And I'm Linda Wertheimer.
More now on this morning's merger announcement by American Airlines and U.S. Airways. The deal would create the biggest air carrier in the U.S., with an estimated value of $11 billion. The merger must still be approved by regulators. And since American Airlines is working its way out of bankruptcy, a federal bankruptcy judge will also have to OK the deal.
NPR's Wade Goodwyn joins us from Dallas, near the headquarters of American Airlines, and near where the new airline will also be based.
Wade, good morning.
WADE GOODWYN, BYLINE: Good morning, Linda.
WERTHEIMER: Now, with this announcement that U.S. Airways will go away, the newly merged carrier will be called American Airlines. But who runs it? A merger like this comes with two sets of managers.
GOODWYN: Initially, there will be some semblance of shared management, but I expect that to be short-lived, about a year. U.S. Airways CEO Doug Parker will be named the new American CEO, and American's current CEO, Tom Horton, will be named the temporary non-executive chairman. And I think that title tells you all you need to know about who will be running the airline day-to-day.
But don't cry too much for the current American CEO. In this world, the losers walk away winners, too. For his hard work through the bankruptcy process, Horton will exit stage left an extremely well-compensated man.
WERTHEIMER: It's fair to say that many of these airline mergers don't go smoothly. It's also fair to say that American and U.S. Airways both have less-than-stellar reputations for customer service. Do you think this merger will make things better or worse?
GOODWYN: I actually think this may work out better than many might expect. For American's unions, this is the outcome they've wanted. The pilots were given a 13 percent equity stake in the new airline. New planes are on the way. I mean, it's now or never. The question is: Can the employees and management eventually create one airline that pleases customers out of two that have had reputations as being user-unfriendly?
WERTHEIMER: More consolidation generally means fewer seats, and that generally translates into higher prices. Is that what's coming?
GOODWYN: There are differing opinions on this. Some analysts believe increases - maybe 2 or 3 percent - are likely. Others are uncertain. What we all know is that what really drives fare prices is fuel cost. I think it is likely that service to some smaller cities could be curtailed as a result of this merger, but it's so early, it's hard to predict the future with much conviction.
WERTHEIMER: That's NPR's Wade Goodwyn, joining us from Dallas. Wade, thank you.
GOODWYN: It's my pleasure. Transcript provided by NPR, Copyright NPR.