The Dallas Morning News aviation blog sums up the deal, pretty much as expected:
[I]t looks like this is the way it’ll go down:
– 72 percent for AMR creditors and other interests, 28 percent for US Airways shareholders.
– Doug Parker will be the chief executive officer.
– Tom Horton will be the non-executive chairman, for only a limited period before he departs post-merger.
– The plan is to announce the deal in the pre-dawn hours Thursday, followed by a 7:30 a.m. CST call with the analyst community, a Dallas/Fort Worth International Airport press conference in mid-morning, a 1 p.m. Dallas/Fort Worth Airport presentation to AA employees, with the video and audio broadcast to other locations.
– After that Parker and his entourage will return to Phoenix to meet with US Airways employees.
The thing sure took long enough. I was skeptical at first because I didn’t think it made business sense (that US Airways would have to overpay to get it done, and that the projected synergies wouldn’t actually materialize). But I predicted in July that it would happen anyway.
Any deal will take perhaps 6 months to close. The airline will be called American, be a member of the oneworld alliance, and be headquartered in Texas.
What this means for the frequent flyer program
Once the merger happens they’ll get to work letting us move miles back and forth between US Airways and American frequent flyer accounts. US Airways and America West did that, Delta and Northwest did that, and United and Continental did that.
They’ll begin to honor reciprocal elite status as well, eventually including upgrades, the challenges here are mostly technology.
We’ll get four elite tiers, lifetime status will survive (folks will either get the 25,000 or 50,000 mile tier — which will be worth less since both are farther from the top under a four-tier system).
And most of the better award values under each program will ultimately be diluted a bit, we’ve already seen the end of the 55,000 mile business class award to Europe during off season from US Airways.
Frequent flyers will benefit in the short-term though from a honeymoon period where the airlines don’t want to anger each other’s loyal customers by taking away benefits or making award tickets more expensive. And frequent flyers will also find it easier to maintain their elite status — with more flights to more places.
Here are the rest of my predictions for the combined frequent flyer program.
And here’s my discussion of whether you should get the signup bonus for the US Airways credit card now, before it’s too late.
What it means for travel on the airlines
It’s a huge challenge to combine airlines, especially corporate culture and IT. United and Continental made a mess of it in 2012, leaving huge numbers of passengers delayed or stranded and with very long telephone hold times to get help. Hopefully American and US Airways will learn from those mistakes.
Over time elite flyers at American will worry about the tendency of US Airways to offer fewer first class seats on their planes and not to offer meals even on 3 hour long flights.
Fares probably won’t be affected, at least in most markets. American and US Airways don’t compete on very many non-stop routes at all. Connecting routes will still mean competition from Delta, United, Southwest and others domestically, and a slew of international carriers for travel abroad.
In the DC market, though, I’d expect they’ll have to divest themselves of slots at Reagan National since US Airways is already the major presence there and American has a strong operation as well (US Airways had to give up some slots when they did a deal with Delta to trade rights at LaGuardia for more rights at National).
Integrating two major airlines is never easy. United went through real pains with the technology in 2012, and this meant delayed and cancelled flights and stranded passengers. The US Airways and America West combination was a total meltdown the day they combined computer reservation systems as well (online and mobile checkin didn’t work, long airport lines, delays).
Combining cultures is tough, American has a real service culture that’s friendly while US Airways employees have been through two bankruptcies and changes in control. It will be a real challenge for that culture not to undermine the service that American has become more known for.
So What Do You Think Now That it Seems Real?