American/US Airways merger (more or less) official — happy Valentine’s Day!

Via The Dallas Morning News, it looks like an American and US Airways merger will be announced tomorrow. Apparently the details will be as follows:

– 72 percent for AMR creditors and other interests, 28 percent for US Airways shareholders.

– Doug Parker will be the chief executive officer.

– Tom Horton will be the non-executive chairman, for only a limited period before he departs post-merger.

– The plan is to announce the deal in the pre-dawn hours Thursday, followed by a 7:30 a.m. CST call with the analyst community, a Dallas/Fort Worth International Airport press conference in mid-morning, a 1 p.m. Dallas/Fort Worth Airport presentation to AA employees, with the video and audio broadcast to other locations.

– After that Parker and his entourage will return to Phoenix to meet with US Airways employees.

About two weeks ago I shared my thoughts about how a combined airline would look, so check out that post for my predictions. Up front it’s worth noting that you have nothing to worry about in terms of your miles and status being “safe.” When a merger happens your status and miles will all carry over to the new, combined program, and it may turn out to be a net positive for many frequent flyers.

One thing that’s worth pointing out (for all the doom and gloom otherwise associated with mergers) is that short term the impact of the merger will be extremely positive for frequent flyer members. I suspect within a couple of months at the latest, members of both frequent flyer programs will be able to transfer miles freely between their accounts in both programs and also match status. So even before they’re officially one airline, you’ll be able to be treated similarly on both airlines.

It goes without saying that the new airline will be a member of OneWorld, and there’s no timeline yet for US Airways leaving the Star Alliance. As a result it may very well be possible that by transferring points between programs you’ll be able to redeem your US Airways miles for travel on OneWorld, and your American miles for travel on Star Alliance. Short term that’s a huge positive, and would make points in either program the most flexible of any airline. It’s possible that US Airways will be in Star Alliance for another six or so months, or it’s possible they leave within a few weeks.

Long term it’s anyone’s guess how the combined airline will look. There’s no doubt that changes will be made to the combined frequent flyer program, hubs will be cut, etc. I’m sticking to what I said in my previous post, and think that for the most part the merger won’t be that bad in terms of frequent flyer program cuts. I think we’ll see four elite tiers, elite mileage bonuses cut for the mid tiers, and unlimited domestic upgrades for elite members. I think the big question is what will happen to the eight annual systemwide upgrades that come with Executive Platinum status. I’d bet good money they’ll be tweaked, whether it’s giving members fewer upgrades, or adding further restrictions.

Last week I wrote a post sharing my thoughts about whether or not it makes sense to buy Chairman’s Preferred status, given that US Airways sells it for just $2,999 if you’ve have any elite qualifying activity on your account. To follow up on that, I think that it could very well make sense now. Keep in mind that the status would only be valid through February of next year, though if you wanted to “jump start” your way to top tier status with either airline, that’s not a bad cost for doing so. You probably won’t be issued any systemwide upgrades, but I’m sure it’ll still interest some. I wouldn’t be surprised to see US Airways cut their buy up offers in the near future, or at least increase the cost, so I wouldn’t wait too long if you’ve been considering it.

So how’s everyone else feeling about this?

Comments

  1. Only think im hoping for is that they keep aa award policies abd they keep US award reps so we can go crazy with free one-ways, stopovers, open jaws and crazy weird routings.

  2. @Mike: LOL. I would love to see that.

    I am never a fan of US Airways by themselves, but a huge fan of how they liquidate miles super easily, and means to ‘trick’ their reps and they being members of Star Alliance is what I miss the most. Already AA charges more and their prices would touch sky high with the dominance I guess.

  3. @ Mike — You’re certainly an optimist! I’d be willing to bet American’s system will be used post merger, and that auto prices awards.

  4. “I suspect within a couple of months at the latest, members of both frequent flyer programs will be able to transfer miles freely between their accounts in both programs and also match status.” As far as allowing miles to transfer between accts that early, I doubt it. The deal has to close first. That could well be some time later this year.

  5. In terms of status, if you’re right about a 4th tier, we’ll likely loose the 100% miles bonus for platinum level. In terms of awards it’s terrible. US has been selling miles like there’s no tomorrow. All those miles and US flyers will now pile onto oneworld burning up the slim inventory we already have. I’d like to know what the positives are. The only thing I can think of is I’ll be able to burn miles originating from a few smaller cities in the US that AA doesn’t currently serve.

  6. It would be nice if AA updated its web site to allow booking online of overseas ( s.e. asia in my case) ff points flights.

  7. @ Nun — I suspect they’ll align with United and do a 25% bonus for 25Ks, 50% bonus for 50Ks, 75% bonus for 75Ks, and 100% bonus for 100Ks. That would be a huge loss indeed.

  8. @ Mikey — They do, it’s just that several of their key partners (Cathay Pacific and Japan Airlines, for example) aren’t searchable for the online award tool. Hopefully they add that functionality soon.

  9. How far ahead is it safe to book US flights to credit to UA? UA could stand to loose a few fliers here, I think there are a few ex US fliers who moved to UA when US gutted their top tier benefits, but still flew US quite a bit.

  10. Really sad after the effort AA put into getting in and out of bankruptcy quickly, their hand was forced by US and a NY lawyer who’s intent was to force a merger and allow Parker and team to begin the bankruptcy cuts all over again. I would be surprised if they exit bankruptcy at all this year and I feel bad for the employees of AA who have to endure more cuts and more of the unknown. This should have been handled AA’s way rather than US. Although, now that it’s done here’s to hoping they create a great AAirline!

  11. Feel bad for the AA staff that had someone tell them this would be a positive for them, hell AWest still isn’t completely integrated, this will just be worse than UA/CO

  12. Can anyone imagine Doug Parker making the gutsy and consistent changes that Horton has begun implementing this past year? Finally American had a clear direction, plan and inspired product pipeline that had many people finally rooting for it. Yet at Usairways under Parker, First class still gets a snack box on a 3 hour flight. Makes me sad to think of what this airline will look like in 5 years and angry that no one had to guts to question which of the two would make the best airline leader, regardless of how much they are loved by their respective shareholders.

  13. I don’t think I would want to be a line employee at the US HQ in PHX.

    If they didn’t move to oneworld it could be a huge impact on that alliance where as US leaving Star won’t be as big of a problem for them. I wonder which alliance is the best deal from a business perspective??

    I would suspect that PHL may lose a hub in this process. I wouldn’t be surprised if PHX did as well.

  14. Surprisingly, feeling a little excited to see how this all shakes up. But at the same time, not happy that I’m going to get dumped into the mix with all the AA elites out there-I’m quite pleased with my upgrade rates on US, and I really fear that’s going to go downhill when AA comes into the fold.

    I don’t understand the Doug Parker bashing-all he’s done is run US in a disciplined fashion that’s made them a consistently profitable and extremely reliable airline. If Parker had been running AA instead of Arpey the past few years, AA would be in much better shape than it’s in today. I’ll gladly take Parker’s disciplined management over Horton’s “we’re going to grow by 20% over the next five years!” fantasy world any day.

  15. I don’t know why the move to OW is a foregone conclusion. Qantas has already essentially bolted from OW with their EK tie up. EY and Air Berlin have quite the cozy financial arrangement and I can’t see EY and QR in the same alliance. They only had 11 members to begin with…w/o Qantas, that’s 10…you get the picture.

  16. I just hope they don’t start gutting saver award availability… as I never seem to be able to redeem for them on US. AA award availability, on the other hand, has always been decent. And let’s hope they don’t implement an “award processing fee” on the new AA as well 🙁

  17. You think its safe to book trips with the latest 100% mileage bonus the expires the 28th? Nothing will change that immediate?

  18. We’ll wait and see. Since UA/CO was supposed to work out in holy matromony. Instead I see the horror stories and I’m staying away from United. Never flown them before, no Mileageplus points and don’t see a reason to fly them now. I don’t know how many teething problems there were when DL merged with NW, but it seems to have eventually worked out.

    Really hoping they don’t screw around with the mileage program yet- trying to save up for a possible trip with AA points.

  19. @ arthur — Absolutely, any tickets that are booked will definitely be honored as well. I doubt anything will happen immediately regardless.

  20. I have a little over 10k miles book on US metal over the next few weeks. I had been planning a US Preferred Trial since I would hit Silver with what I already have booked, potentially going for Chairman if I can find enough decent fares. I was originally planning to wait until a day or two before my first flight to give myself the most time to qualify. With the merger announcement coming, do you think it is still safe to wait that long, or should I sign up sooner than later? First flight is in 10 days.

  21. I think it’s very unlikely that the frequent flier programs will be integrated in any significant way in 2013. In fact, I’d wager nobody who buys CP now will ever see EXP as a result of that purchase.

  22. Wouldn’t it make a strange situation if you book a star alliance award for the future and by the time you took the trip they moved to one world and you encountered irrops? Keep you on star flights? One world?

    I might try to find some seats to use some usairways miles since post merger I would have 600 k combined and another 250 k on ba. Seems too much in one alliance for someone like me who travels at most once a year on an award.

  23. @ Rich ( arizona) — If there’s a schedule change it would get very complicated as a liaison may have to get involved, but if it’s just irregular operations it’s usually the duty of the airline operating the segment to accommodate you.

  24. @ Jeremy — It’s anyone’s guess but I doubt the Silver trial will end anytime soon, so I wouldn’t be worried in your shoes.

  25. Just curious. Do they really have to be in any alliance? Couldn’t they just partner up where needed but otherwise not join one?

  26. @ Rich ( arizona) — Well they certainly don’t have to be in an alliance, and while we are seeing a trend away from alliances and towards partnerships, I don’t think we’re at the stage where it makes sense for the world’s biggest airline to fly solo (no pun intended).

  27. I will NEVER fly on the combined carrier if I can help it. EVER. I hate the fact that Dougie is being rewarded for his whining, childish, behavior, “Why won’t AA merge with me?,” and acting like a little boy who’s just been told he can’t have an ice cream cone.

    I hate the fact that AA’s unions are being rewarded for their whining and their blind, irrational hatred of Horton and current management.

    I will do everything in my power to never give them one penny of my money. Living in DC, it’ll be a pain to schlep out to IAD, and it’ll be a pain to put up with the decrepit C/D concourses that UA uses, that is preferable to giving Dougie & the AA unions any of my money.

  28. A little annoyed. US Airways was my Star Alliance flight out my home YEG to PHX and more importantly LAS. This means I either need to fly into ORD, DEN, SFO or LAX on UA or AC (who often code share their flights) to fly Star Alliance. AA already code shares with Westjet for all these routes so prices may rise because of the lack of competition on those routes.

  29. I’m kind of dissappointed. My #1 travel route is MEL-JFK. My only option will be QF now and their C availability is pretty hard to get. UA used to be way easier.

  30. @David – The combined carrier will have to pick one alliance, and regulators are unlikely to approve a merger into *A. Furthermore, AA sits at the head of OW and has ATI/JVs with partners already in place.

  31. @David – The already have an official website newamericanarriving.com which has the oneworld logo and mentions the combined airline being a member of oneworld. That’s a done deal assuming merger goes thru.

  32. @Lucky- I have a US Airways award already booked with Star Alliance partners for July travel, will the merger affect this booking? Will US Airways still honor it? Thank you

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