(Reuters) - US Airways Group Inc and AMR Corp, the parent of American Airlines, are nearing an $11 billion merger that will create the world's largest airline.
Under terms of a deal that are still being finalized, US Airways Chief Executive Doug Parker will become CEO, while AMR's Tom Horton will serve as non-executive chairman of the board until spring of 2014, when the combined company holds its first annual meeting.
The deal will come more than 14 months after AMR Corp filed for bankruptcy in November 2011.
The merger will value the combined carrier at between $10.5 billion and $11 billion, and will give AMR creditors 72 percent of the ownership in the new company and US Airways shareholders the rest.
The board of each airline will meet next Wednesday to vote on the proposed deal. Negotiations are continuing and could still be delayed or fall apart.
The AMR creditors committee will meet on Monday in New York and will continue discussions as the airlines finalize negotiations.
A combination with US Airways will create the world's top airline by passenger traffic and help the two carriers better compete with rivals United Continental Holdings and Delta Air Lines Inc.
US Airways will follow through on its agreement with AMR labor unions last year that the combined carrier will be branded American Airlines and be based in Fort Worth, Texas, where AMR is currently based, sources said. US Airways has its headquarters in Tempe, Arizona.
The airlines are estimating that a merger will bring about $1 billion in revenue and cost benefits.
A combined American-US Airways will provide the scale to match bigger rivals that are upgrading service and expanding international routes. The merged company will have revenue of $38.69 billion based on 2012 figures, ahead of United Continental, which had revenue of $37.15 billion last year.
The new American will have a solid presence on the important U.S. East and West coasts and on North Atlantic routes, given American's revenue-sharing joint venture with British Airways and Iberia.
from Reuters
