US Airways chief executive Doug Parker has landed the big merger he sought for years. Now the soon-to-be CEO of the new American Airlines has to make it work.
The two airlines announced an $11-billion merger Thursday that will turn American into the world's biggest airline, with some 6,700 daily flights and annual revenue of roughly $40 billion.
It's a coup for Parker, who runs the much-smaller US Airways and has long pursued a deal like this one with the strong belief that airlines would have a better shot at consistent profits if they bulk up through mergers.
The latest deal will mean that the four biggest U.S. airlines are all the product of mergers that began in 2008. Those deals bring benefits, but they also show that putting together two airlines smoothly is not easy.
The combined carrier is going to be called American Airlines and be based in Fort Worth, Texas. The deal is expected to close by the end of September, as part of American's emergence from Chapter 11 protection.
Even after that, travelers on American and US Airways won't notice immediate changes. It likely will be months before the frequent-flier programs are combined and years before the two airlines are fully integrated.
Parker said the new airline will keep all of American's hubs -- Dallas-Fort Worth, Chicago, Miami, New York and Los Angeles -- and those of US Airways, in Phoenix, Charlotte and Philadelphia.
Rapid consolidation of the industry has allowed surviving airlines to offer bigger route networks that appeal to high-paying business travelers. And it has allowed them to limit the supply of seats, which helps prop up fares and airline profits.
That concerns some consumer advocates, but Parker sought to assure travelers that the merger helps them too -- by creating a bigger rival to United and Delta.
"There are two very large airlines right now, and this creates a third," Parker said in an interview. "It provides good competition to those two."
Most airline mergers have resulted in a reduction of flights and shrinkage at some hubs, but Parker said this deal will be different because US Airways and American overlap on just 12 routes.