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Raj News

Flying High! Largest Airline Merger worth $11billion!

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usairwaysandamericanairlines

US Airways and American Airlines are merging to create the biggest airline in the world. The deal is worth $11 billion!

The initial talks between the two airlines had begun in August 2012 and the merging of the two airline companies was confirmed on the 15/02/2013; the merger will see the airline market become more competitive and close the gap between competitors such as  Delta airlines. The company will be operating under American Airlines whose creditors will hold 72% of the merged company, although the Chief executive of the company will be US Airways boss Doug Parker.

Mr Parker said of the merger “Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to go”, the merger will see savings of $1 billion a year for the two companies, he also said: “The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace.”

For the public this merger should be good, as ticket prices should drop with the airlines being able to afford dropping their prices in return for more members of the public flying with the merged company and this is certainly likely due to more consistency being provided in flight times and availability which there will be much more of as the merged company will together have a total of 900 planes and operating more than 3,000 flights with over 100,000 employees and will be aiming to increase on all the numbers stated.

American Airlines has seen bankruptcy in the past whereas US airways has seen profits in the past few years, the US airways boss Mr Parker also seems positive on the revenue for the future saying that the “Combined airline will compete more effectively and profitably in the global marketplace.”

The new merger will be offering more than 6,700 daily flights to 336 destinations in 56 countries.

Although the two companies would like to see the merger happen, they are still to be subjected to the competition regulators of the US and the US bankruptcy court and their approval.

The BBC report on the merger and quote the Senate Commerce Committee chairman Jay Rockefeller and his concern about the two airlines joining forces: “Industry consolidation has created stronger and more financially viable airlines, which are necessary for our country’s long-term economic growth, but it has also resulted in fewer choices for consumers, higher air fares, and reduced air service to small-and-medium sized communities.”

This is the argument on the other side about airline mergers and although they may be positive for the airline and the public, it will mean more power to the airlines and whether they choose to misuse this power by hiking up airline prices is something everyone will be watching carefully.

Other mergers in the airline industry that have taken place are Delta airlines with Northwest airlines and Continental airlines with United airlines.

Flying_High

One Response

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  1. This is a great article! I wonder if this is going to a good thing for consumers…

    Davina

    February 21, 2013 at 10:32 pm


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