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New American Airlines now largest carrier in the world

American Airlines and US Airways merged on Monday to create the new American Airlines, the world’s largest airline, after overcoming antitrust concerns.

By (Agencies)

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Published: Tue 10 Dec 2013, 1:05 PM

Last updated: Fri 3 Apr 2015, 5:26 AM

AMR Corp, the former parent of American Airlines, and US Airways Group announced they had completed the deal after AMR emerged from bankruptcy protection.

The new American Airlines Group is a goliath, providing nearly 6,700 daily flights to more than 330 destinations in more than 50 countries.

“Our people, our customers and the communities we serve around the world have been anticipating the arrival of the new American,” said Doug Parker, chief executive of American Airlines and the former chairman and chief executive officer of US Airways.

“We are taking the best of both US Airways and American Airlines to create a formidable competitor, better positioned to deliver for all of our stakeholders. We look forward to integrating our companies quickly and efficiently so the significant benefits of the merger can be realised.”

American Airlines began trading on Monday at $23.95 on the Nasdaq exchange under the ticker symbol AAL. In the first half hour of trade, the stock climbed to $24.40.

The new American Airlines Group Inc is poised to rise on confidence that the world’s largest carrier can avoid the pitfalls that dragged down other mergers.

‘Formidable’
The stock may reach $39 by 2015, estimated Hunter Keay, a Wolfe Research analyst, while Jamie Baker of JPMorgan Chase & Co sees American rising to $37. Holders of US Airways, which closed last week at $22.55, will get shares of the new company in a one-for-one exchange.

Parker took the helm as chief executive officer with lessons learned in creating the current US Airways in a tie-up with America West Holdings in 2005. As he seeks $1 billion in new revenue and savings, he plans to smooth technology bumps by using the reservation system at AMR’s American, the bigger airline, and has union accords in place to ensure labour peace and predictable costs.

“They are in a good position,” Savanthi Syth, a Raymond James Financial analyst, said in an interview. “That’s not to say they won’t have any hiccups, but they have their own merger experience and they’ve watched what’s worked and hasn’t worked for others. They will be a formidable competitor.”

Parker, 52, said last week he hopes to beat his $1 billion goal. That sum matches Delta’s initial 2008 target in buying Northwest Airlines, and trails the $1.1 billion to $1.2 billion sought in the 2010 merger creating United Continental Holdings from UAL and Continental Airlines. United and Delta, now the world’s biggest airlines, both suffered merger-related bumps.