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US Airways shareholders OK American Airlines merger

Charisse Jones
USA TODAY
US Airways and American Airlines planes at DFW International Airport on Feb. 14, 2013.
  • US Airways%27 CEO says shareholders have approved the proposed merger with American
  • The deal is still being reviewed by antitrust regulators at the U.S. Department of Justice
  • Combined airline would be the world%27s largest

US Airways shareholders have approved the pending merger with American Airlines, a step that moves it closer to becoming the largest carrier in the world.

US Airways CEO Doug Parker announced the approval at the airline's annual meeting of stockholders of Friday.

"The landscape has changed as other mergers have taken place,'' said Parker, who will be the CEO of the newly merged carrier.

The union of Northwest and Delta in 2008, United and Continental in 2010, and Southwest and AirTran in 2011 "created three airlines that are larger than US Airways and made it very difficult for airlines like US Airways and American Airlines to compete with our relatively smaller network. The merger of US Airways and American eliminates this competitive disadvantage.''

The merger is expected to close by the fall, and will mark the last significant merger among U.S.-based airlines. But before the deal is finalized, it must first clear a few more hurdles.

Creditors for American Airlines, which has been under bankruptcy protection since November 2011, are voting on that carrier's reorganization plan. Voting must conclude by July 29. If it gets the OK, the bankruptcy court is scheduled to hold a hearing to review the plan on Aug 15.

If the court signs off on the plan, the last step is for the Department of Justice to give its approval, if it determines that the newly combined carrier doesn't violate U.S. trust laws.

US Airways shareholders will own 28% of the new American, while American Airlines creditors and shareholders will have the remaining 72%.

Once the merger is closed, it will take another 18 to 24 months for the newly merged airline to gets its certificate from the Department of Transportation to operate as a single airline and for it to fully integrate its reservations systems, fleets and other components.

The rampant consolidation in the airline industry has caused some to express concern that airline ticket prices will rise, and smaller markets will lose service as air service is in the hands of a handful of jumbo-sized carriers.

US Airways and American currently have overlapping service on only 12 routes, but Parker acknowledged that some of their competitors have said that the two airlines should give up landing and departure slots at Reagan National Airport near Washington, D.C., before their union is approved.

"We don't see any reason . . that we should be asked to divest by the Department of Justice,'' Parker said at the shareholders meeting. If asked to do so, he said that they will. But that will likely lead to "a loss of service to small communities.''

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