American, US Airways merger moves forward

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US Airways Planes at Sky Harbor
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US Airways and American Airlines parent AMR have settled a lawsuit filed by the U.S. Government and will complete a merger late this year.

The settlement includes states that contested the merger. The combined airlines will turn over landing slots from Washington Reagan National Airport. The government had contested the merger, but had been in settlement talks.

The merger has led to fears of cutbacks at Philadelphia, a key hub for the combined airlines. The agreement calls for the hubs to be maintained for three years. Delaware is believed to be the home for hundreds of US Airways employees, although the company does not break down employment by state.

Doug Parker, who headed US Airways will serve as the the CEO of the combined airlines that will operate under the American name.

Under the terms of the settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport (DCA) and 17 slot pairs at New York LaGuardia Airport (LGA), as well as certain gates and related facilities to support service at those airports. The airlines also will divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O’Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport.

The divestitures will occur through a DOJ approved process following the completion of the merger. Despite the divestitures, the new American is still expected to generate more than $1 billion in annual net synergies beginning in 2015.

In the settlement agreement with the state Attorneys General, the new American has agreed to maintain its hubs in Charlotte, New York (Kennedy), Los Angeles, Miami, Chicago (O’Hare), Philadelphia, and Phoenix consistent with historical operations for a period of three years.

Completion of the merger remains subject to the approval of the settlements by the U.S. Bankruptcy Court, and certain other conditions.

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