American Airlines & US Airways Announce Merger

Bernard Weinstein, an economist and associate director of SMU's Maguire Energy Institute, talk about the aftermath of the American Airlines and U.S. Airways merger.

By Jack Fink and Jason Allen

FORT WORTH (CBS 11 NEWS) – Fort Worth’s American Airlines and Phoenix’s US Airways formally announced a merger on Thursday morning to create the world’s largest airline. Both company boards voted to approve the deal on Wednesday evening.
Under the agreement, US Airways CEO Douglas Parker will become the chief executive of the new airline while American Airlines CEO Tom Horton will move to non-executive chairman of the board of directors and will not have any day-to-day responsibilities.

“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 Horton in a written news release announcing the deal. “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.”
Parker echoed Horton’s statements. “American Airlines is one of the world’s most iconic brands. The combined airline will have the scale, breadth and capabilities to compete more efficiently and profitably in the global marketplace.”...

SMU economics professor Bernard Weinstein said, “That would give us some bragging rights. We would be home to the world’s largest airline.” The new, larger airline, Weinstein said, will offer more flights from DFW. “For businesses and people located here, you’ll really be able to fly anywhere in the world on American.”
Weinstein said, because of the American Airlines bankruptcy, the airline has been able to cut costs. In the end, this will help it compete.
While the combined company will likely bring more flights to DFW, Weinstein said, it will also result in higher airfares because of less competition. “American will virtually have a monopoly on every route that they fly,” Weinstein said. “The only hope is that there will be some competition from other airlines.”...