Source: American, US Airways voting to merge

6:40 PM, Feb 13, 2013   |    comments
The tails of American Airlines and US Airways aircraft are seen at Ronald Reagan Washington National Airport on April 23, 2012. (Photo: Jim Watson, AFP/Getty Images)
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(USA Today) -- The boards of US Airways and American Airlines are voting this afternoon about whether to merge and create what would become the largest carrier in the world, according to a person familiar with the discussions but not authorized to speak publicly.

If the boards support the move, the newly combined carrier would become the largest airline in the world by revenue and passengers carried, and represent the last significant merger in an industry now dominated by a handful of powerful, mega-sized players.

The new mega-sized airline would also need to be approved by federal regulators, who would want to make sure that the marriage does not dramatically reduce competition in certain markets. But US Airways and American had overlapping non-stop service on only a dozen routes as of January, so that is not likely to be a concern, some analysts say.

"We don't see this as being an issue in terms of being approved,'' says John Thomas, head of the global aviation and travel practice at L.E.K. Consulting.

A merger will allow American, which sought bankruptcy protection in Nov. 2011, and US Airways to better compete with Delta and United, which grew in size and dominance after their own recent mergers.

The combination would give American a stronger footprint along the east coast where US Airways has hubs in Charlotte and Philadelphia, and allow US Airways to have reach across the Atlantic and into Latin America.

It would be the last ripple in a wave of consolidation that has swept the airline industry in recent years. Delta and Northwest joined forces in 2008, United and Continental linked up in 2010, and low-cost giant Southwest completed its purchase of AirTran in 2011.

The small number of overlapping routes means that a newly combined carrier would not have to slash many redundant routes.

(USA Today)

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