US Airways shareholders overwhelmingly approved a proposed merger with American Airlines, bringing the companies closer to creating the world's biggest airline.
US Airways shareholders overwhelmingly approved a proposed merger with American Airlines, bringing the companies closer to creating the world’s biggest airline.
The main hurdle now is a review by antitrust regulators at the U.S. Department of Justice. Concerns have been raised about the merger’s impact on airfares, and the combined airline’s potential dominance at Washington’s Reagan National Airport.
The man who will lead the combined company, US Airways CEO Doug Parker, was once again adamant Friday that the combined airline should not be forced to give up any takeoff and landing slots at Reagan National, where it will be by far the biggest carrier.
At Friday’s shareholder meeting in New York – likely the last for US Airways Group Inc. – 132.3 million shares were voted in favor of the merger and about 258,000 against it, the company said. The US Airways shareholders will get 28 percent of the new company, with the rest going to creditors, employees and shareholders of American Airlines parent AMR Corp.
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AMR has been operating under bankruptcy protection since November 2011, and its creditors are voting through July 29 on a reorganization plan that includes the merger. They are widely expected to favor it, and a federal bankruptcy judge in New York could confirm the plan at an Aug. 15 hearing.
At Thursday’s closing price for US Airways shares, the all-stock deal would be worth roughly $12.8 billion. Since American filed for bankruptcy, US Airways shares have nearly quadrupled to $17.37, as investors bet on merger of the two airlines.
European regulators are expected to announce a decision on the merger this month. The U.S. Justice Department has not commented on its review, but some members of Congress have questioned whether US Airways and American would be too strong at Reagan airport. Together they would control about two-thirds of the takeoff and landing slots at the close-in airport.
Parker said after previous airline mergers, Delta, United and Southwest have even greater domination at airports such as Atlanta, Newark, N.J., and Chicago’s Midway Airport.
“So clearly the standard of 67 percent is not an antitrust issue or none of those mergers would have been approved,” Parker said.
Critics of the merger worry that it will reduce competition and drive up prices. Concern about less competition and higher fares also accompanied the combinations of Delta and Northwest in 2008, United and Continental in 2010, and Southwest and AirTran in 2011. Antitrust regulators allowed all those deals to go through.
If the American-US Airways deal is completed, four airlines will control more than 80 percent of the domestic air-travel market.
The combined company would be called American Airlines Group Inc. and be based at AMR’s headquarters in Texas. Its senior leaders, however, would come mostly from US Airways, including Parker as CEO, Scott Kirby as president, Robert Isom as chief operating officer, and Derek Kerr as chief financial officer.
The airlines would operate separately for months if not a couple years as they combine workforces, fleets, computer systems and frequent-flier programs.
Labor unions at American Airlines gave critical support to a merger that would result in Parker running the company instead of AMR CEO Tom Horton. Other unions are hoping the merger will help them get a toehold inside the new company.
Several dozen supporters of the Service Employees International Union, which is attempting to organize nonunion airport workers, protested outside Friday’s meeting and a few spoke to US Airways executives.
“The merger would increase profits dramatically,” said Rashad Grant, who said he makes $8 an hour as an airport wheelchair attendant for an American Airlines subcontractor in Florida. “There’s no reason we shouldn’t receive the respect, the benefits and the pay that we deserve.”
Koenig reported from Dallas.