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Annenberg School of Communication and Journalism University of Southern California
Nation/World

Major Airline Merger Proposed

The potential deal between American Airlines and U.S. Airways would create the world's largest air carrier.

The merger will allow American Airlines' parent company to emerge from bankruptcy.
The merger will allow American Airlines' parent company to emerge from bankruptcy.
American Airlines and U.S. Airways are expected to announce a merger as early as next week, possibly creating the world's largest airline carrier, according to the Wall Street Journal.

The stock-only deal between the airlines would allow American's parent company, AMR to emerge from Chapter 11 bankruptcy.

The air carriers' unions have already approved the terms of the deal. The transaction is just pending approval from creditors, according to Forbes.

"One reason airlines merge, like companies in any industry, is to control a little more market power," Seth Kaplan of Airline Weekly told Marketplace.

American and U.S. Airways compete directly in a handful of markets, which may see small fare increases. But stiff competition from other major carriers will keep ticket prices steady.

Currently, U.S. Airways is currently a part of the Star Alliance with United Airlines. American Airlines is a part of the OneWorld Alliance.

The merger would mean that most air travel in the United States would be available through four airlines: American, Delta Airlines, United, and Southwest, NBC reported.

The new carrier would likely operate under the more internationally-recognized American Airlines brand.

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