US Airways-American Airlines Merger Approved by Bankruptcy Judge, Expected to Close December 9

American’s bankruptcy judge approved the anti-trust settlement between American, US Airways, the US Department of Justice and several states.

What’s more, the judge ruled that incorporating the settlement didn’t constitute a material change to American’s plan or reorganization, thus a new plan approval was not required.

The merger will be allowed to proceed, and is expected to close December 9th.

A ‘private’ anti-trust suit remains underway. The group suing the airlines had sought a restraining order to block the merger, but the judge ruled that they had failed to show irreparable harm should the merger proceed and denied their request and ruled that they would have to cover costs.

In my view because US Airways is overpaying, American’s unsecured creditors will be made whole and there will be some equity in the new company for American’s shareholders as well.

The Dallas News Aviation blog reproduces the judge’s order allowing the merger to proceed.

The process sure took long enough — bankruptcy for nearly two years, merger speculation for nearly that long, a merger that had been expected to close back in August before the Department of Justice filed suit.

I don’t know any frequent flyer who actually wanted this. I’m as close to any that will benefit from it, living in a US Airways hub city as an American Airlines 100,000 mile flyer.

My hunch is that we will see some changes coming to the combined frequent flyer program of the new airline — changes that would have happened anyway, that get attributed to the merger. And that while there will be unhappiness amongst the flyers of both airlines, what emerges will be a frequent flyer program that is still better than Delta’s (and an award chart more lucrative than United’s as well), and an airline operation better than United’s. I suppose that’s George Bush’s ‘soft bigotry of low expectations’ and while I’d have much preferred standalone carriers, American going forward is highly likely to remain my domestic airline of choice.

As a reminder, we can expect reciprocal mileage-earning and redemption January 7. There should be some elite status recognition coming after that, as well as a likely ability to move miles back and forth between the two frequent flyer programs.

US Airways will leave the Star Alliance — possibly March 1, but highly likely by the end of March. It will then join oneworld, sometime after it leaves Star and possibly on or about April 1.

The airlines will continue to operate independently. My guess is that they are combined into a single brand before the end of the first quarter of 2015 — perhaps sometime in February 2015 or if I had to guess a date certain it would be March 7, 2015.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. What’s the source on Jan 7 for reciprocal benefits? I’ve seen this mentioned a few times, but no details.

  2. I have a lot of respect for the Cranky Flier but I can’t believe he has been and still is for this merger. Anyone who travels is going to be paying for this loss of competition.

  3. The finalization of this merger, just in time for Christmas, has me feeling extra grinchy this year. Or, in a more Dickensian vein:

    Bah Humbug!

  4. @JB I get the case from a business standpoint. I do not think the case is true. Mergers don’t produce the promised synergies most of the time. Those synergies are usually cost cutting and layoffs, but in this case the promise to labor is the opposite — raises. So my bet is this doesn’t produce the financial performance that’s promised. But that is something that will be proven right or wrong, and plenty of people — including presumably Cranky — believe it. I don’t.

    But that’s a wholly different discussion from whether most airline mergers benefit frequent flyers. Usually we’re benefiting too much because one airline or another is making a bet that turns out bad, being ultra-generous, and merging ends that. Is it sustainable? Probably not. Do I have to like it? No I don’t.

  5. For some reason I had always had it in my head that US would leave *A before mileage sharing got figured out, or that miles would only convert one way (US to AA, since AA is officially the new company and FF program). But for some reason what you said here just jumped out a bit. Do you indeed envision a period of a couple months where someone could push AA miles over to US and burn on *A? If so, things could get interesting.

  6. @CW I assume that mileage transfers will happen after US Airways leaves Star as well, I did not mean to suggest a different chronology (although I do not know that it will not happen that way).

  7. One positive I see for me is flying out of TUL-DFW on a larger plane (ie 757 or md80) instead of a E-145 to either IAH or ORD. Going to probably accrue on Alaskan Airlines or another airline until this roller coaster ride settles.

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