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American, US Airways to create world’s biggest airline

American Airlines and US Airways have confirmed plans to merge, in a deal that will create the world’s largest airline group.

The boards of American’s parent company, AMR Corp, and US Airways Group unanimously approved the merger agreement, which will see the new entity operate under the American Airlines name. The combined carrier will have a value of approximately US$11 billion, with AMR stakeholders to own 72% and US Airways shareholders taking 28% of the company’s stock. It will offer more than 6,700 daily flights to 336 destinations in 56 countries, handing an estimated 160 million passengers per year. It will also be a member of the oneworld alliance.

The combined airline will handle approximately 160m passengers
The combined airline will handle approximately 160m passengers

Thomas Horton, American’s current chairman, president & CEO, will serve as chairman of the new airline, while Doug Parker, chairman & CEO of US Airways, will serve as CEO, with a seat on the board.  The company will be headquartered in American’s Dallas-Fort Worth base, but will maintain a significant presence at US Airways’ home in Phoenix.

“We are proud to launch the new American Airlines – a premier global carrier well equipped to compete and win against the best in the world,” said Horton. “The combination of American and US Airways brings together two highly complementary networks with access to the best destinations around the globe and gives us a strong platform to provide our customers the most connected, comfortable travel experience available. The operational and financial strength of the combined airline is expected to enable continued investment in new products and technologies and will create exciting new opportunities for our people, even as we deliver strong cash flow and sustainable profitability.”

The combined airline is planning to take delivery of more than 600 new aircraft in the coming years, and it will also retrofit its existing Boeing 777-200s and B767-300s to include flatbeds in business class. At present, the company’s combined fleet size stands at more than 1,000 aircraft.

While the merger still depends on legal requirements pertaining to American Airlines’ 2011 bankruptcy protection filing, the US Airways deal effectively secures the future of the airline which started operations in the 1930s.