American Airlines and US Airways have officially confirmed their merger to become world's largest airline -- the "new" American Airlines.
The boards of American Airlines and US Airways both on Wednesday approved a merger deal. The formal announcement of the merger came early Thursday morning on American Airlines' website.
The companies will merge into the "new" American Airlines, keeping the carrier's recently revealed livery and branding and dropping the US Airways name.
A new website for the combined company details many of the frequently asked questions about the merger.
The deal is valued by the companies at $11 billion of combined equity value based on US Airways' stock price on Feb. 13, 2013.
American Airlines CEO Tom Horton will serve as chairman of the airline's combined Board of Directors through the first annual stockholders meeting, according to an official press release. US Airways CEO Doug Parker will serve as CEO of the new company and be a member of the Board of Directors until transitioning to the chairman role following Horton's first year.
Horton will receive a $20 million severance package.
When asked if the figure is fair, Parker told NBC 5: "I had nothing to do with the $20 million figure. That was between Tom and the creditors committee. They thought it was fair. And that's not US Airways' concern, frankly. It's not our money."
But Bloomberg News reported that an attorney for American's creditors said both airline boards were involved in the severance negotiations.
"What I'd like to tell the employees is, we'vegot to start looking forwards and not backwards anymore," Parker said.
The company details its new board as having three American Airlines representatives, including Horton, four US Airways reps, including Doug Parker, and five AMR creditor reps.
The new airline will keep its headquarters in Fort Worth.
"[I'm] glad to see it finally happening. It will be a great airline for travelers and continue to grow," Fort Worth Mayor Betsy Price said. "Fort Worth will remain their home, and we are very pleased about that. [There are] still lots of details to be answered, but I feel good about it."
"American Airlines, its subsidiary American Eagle and US Airways together provide about 86 percent of the flights at DFW Airport," Jeff Fegan, CEO of Dallas/Fort Worth International Airport, said in a statement Thursday. "Moving forward, their collective success is obviously vital to the success of DFW Airport, and the newly merged airline will continue as an important contributor to the Dallas/Fort Worth economy and a major piece of the United States aviation and transportation infrastructure needed to connect our region to the world."
Union Leaders Thrilled With Announcement
American Union leaders are thrilled with the announcement.
"We think it's the best long-term solution for the viability of the airline, and we're very excited," said First Officer Jennifer Ewald, Allied Pilots Association spokeswoman.
Union leaders attacked American Airlines management for years, and Parker courted them for merger support early in American's bankruptcy process.
"I think what they said is, if the employees get behind this and they want this to work, that's how you make a great airline; when everybody wants it to be that," said Laura Glading, Association of Professional Flight Attendants president. "When you get people who really want to participate and work as a team, then you always have success, and I think the people at US Airways recognize that."
Horton and his predecessors at American dealt with big financial problems that made it difficult to please employees.
But American's managers also took big bonuses that soured the relationship with employees.
"I think it's a combination of things, but I think just moving forward, looking at the people we've dealt with already, we're looking forward to new and good things," said Garry Drummond, Transport Workers Union vice president.
Parker has promised that future management compensation will be less out of line with workers.
US Airways pilots also said they are pleased with the new combination.
"It will offer plenty of competition globally through out the world and hopefully offer a much more stable environment for the employees in the future," said James Ray, US Airlines Pilots Association spokesman.
New Airline Releases Statement
The "new" American Airlines released the following statement from its leaders Thursday morning:
"Today, 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 Tom Horton, Chairman, President, and Chief Executive Officer of American Airlines. "Together, we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners, and the many communities we serve."
"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."
"Over the past year, the American team stood tall as we established a rock solid foundation for long-term success through an efficient and effective restructuring. As part of this process, after months of exhaustive analysis and a thorough review of all alternatives, we concluded that this merger is the best outcome for our company, delivering not only the greatest value for our financial stakeholders, but also positioning us well for sustainable success over the long term."
"This merger provides enhanced potential for full recovery for our creditors. In addition, I am pleased that we were able to obtain the support of a sizable portion of our unsecured creditors for a plan that provides a recovery of at least a 3.5% aggregate ownership stake in the combined airline for our shareholders. It is unusual in Chapter 11 cases -- and unprecedented in recent airline restructurings -- for shareholders to receive meaningful recoveries. I look forward to working closely with Doug Parker, whom I have known as a friend for more than 25 years, and with the leadership teams of both companies to assure a smooth integration and the creation of a new industry leader."
Doug Parker, Chairman and Chief Executive Officer of US Airways, said, "Today marks an exciting new chapter for American Airlines and US Airways. American Airlines is one of the world's most iconic brands. The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace. 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 travel, when they want to go."
Parker continued, "Today's announcement is possible only because of the important work carried out over the past year by Tom Horton and the American team. No one cares more about the long-term success of American Airlines and its people than Tom. Through a successful restructuring and this merger, Tom and the American team have established an excellent foundation for the new American Airlines to become a premier global airline. I am grateful for all that Tom has done to ensure that American is in the best position possible for future success and am delighted he has agreed to remain on board to assist with the transition.
"I am particularly pleased for the employees of both US Airways and American. This merger will create a stronger company, with the path to improved compensation and benefits and greater long-term opportunities for all our employees. We are grateful to have the support of both companies' unions and thank them and their leaders for their hard work and vision. We look forward to a bright future for our employees and enhanced service and choice for our customers. With today's announcement, we start becoming one team and one new airline."
"Soft Takeover" to World's Largest Airline
The Wall Street Journal first reported that both boards had voted on Wednesday to approve the merger.
The deal has been in the works since August, when creditors forced American to consider a merger rather than remain independent. American has been restructuring under bankruptcy protection since late 2011.
Together, American and US Airways will be slightly bigger than United Airlines. Travelers won't notice immediate changes. It will likely be months before the frequent-flier programs are merged, and possibly years before the two airlines are fully combined.
If the deal is approved by American's bankruptcy judge and antitrust regulators, the new American will have more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates. It will expand American's current reach on the East Coast and overseas.
"If this is a takeover, it is one of the softest takeovers I've seen," said Rick Seaney with Dallas-based Farecompare.com. "Stays in Dallas, stays with advantage program One World, 70/30 deal, losing top management it looks like, but I'd say it's a pretty passive, aggressive takeover."
The merger is a stunning achievement for Parker, who will run the new company. Parker's airline is only half the size of American and is less familiar around the world, but he prevailed by driving a wedge between American's management and its union workers and by convincing American's creditors that a merger made business sense.
"In the short-term, this deal is going to take about two years to happen, so we've seen airlines raise prices, attempt to at least three or four weeks, that's going to continue regardless of this merger," Seaney said. "Long-term prices will be higher, it'll be tempered by the economy and how much we can afford to pay for tickets right now. That's what's holding prices down at the moment."
Travelers at DFW Airport said Wednesday that they were not surprised to hear about the merger.
"I think it's good," Ethan McClusky said. "I think it betters the airline, and they said pilots are going to get better raises, so I think it's better overall."
Mark Boeller, who always flies American, said he thinks the merger will be great.
"It will give us access to the East Coast," he said. "American's going to continue being a primary player. I think it'll be awesome."
But Chris Desjardins said his experience with US Airways has not been good and said he doesn't think the merger will help American.
"When I use to fly up and down the East Coast, I would fly US Airways," he said. "All I can think of is, everything about American is going downhill; their customer service."
Just five years ago, American was the world's biggest airline. It boasted a history reaching back 80 years to the beginning of air travel. It had popularized the frequent-flier program and developed the modern system of pricing airline tickets to match demand.
But years of heavy losses drove American and parent AMR Corp. into bankruptcy protection in late 2011. The company blamed bloated labor costs; its unions accused executives of mismanagement.
NBC 5's Greg Janda, Scott Gordon, Ray Villeda, Brian Curtis and Ken Kalthoff contributed to this report.