American Airlines And US Airways Merger Decision On February 11, 2013

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Bloomberg is reporting that a decision to merge American Airlines and US Airways could come as early as Monday. American Airlines and US Airwyas boards are expected to hold a vote in favor of the agreement which would give the creditors of American Airlines a 72% stake in the combined company while giving US Airways a 28% stake.

The combined company calls for $1.2 billion in synergies coming from cost reductions and additional revenue. Most business combinations fail to achieve the targeted value and with a number as high as $1.2 billion, this will be a hard target to hit. Doug Parker will lead the combined company while Tom Horton is expected to negotiate a 1-2 year stent as non-executive chairman.

The combined entity is expected to join the Oneworld alliance, which means all those US Airways mile purchases will now be used for Cathay Pacific, American Airlines, British Airways, Air Berlin, Japan Airlines, LAN, Malaysian Airlines, and Qatar award seats.

If you are like me, in that you already have more miles than you can use, you’ll start looking to lock in award availability over the next year. Because a combined company will mean a combined award balance between American Airlines Advantage and US Airways Dividend Miles.

How big will your combined airline mile balance be?

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  1. I dont have status with US. Whats the award change policy of i book award flights now but i probably have to make changes on the dates?

  2. for starters, say goodbye to those 90K business class redemptions from N.A. to Asia, and you’ll start to subject those miles to really restrictive award routing rules (like JFK-LIM-SCL is not allowed when JFK-SCL nonstop is unavailable, or trying to get *any* QF J/F seat across the pacific without booking 11 months in advance)

    i just recently burnt 135K of AA miles before the combined devalued chart arrives.

  3. While I prefer Star Alliance over Oneworld, I am actually happy they are staying in Oneworld because I still have plenty of UA miles to use on Star Alliance flights, and since I don’t belong to any other Oneworld programs, I will have more options this way.

  4. I’ll have over 300,000 miles with the two… with another churn or two, I could easily turn that into 500,000 before the programs merge. I know I lose the flexibility of booking Star Alliance awards, but I’m looking forward to having a functional online search engine for those annoying USAir miles.

  5. One good benefit, unless the merger guts it, is that with AA you’re able to book one-way awards and first class to Europe is 125K vs. 135K for Star Alliance. Again, will have to see if devaluation occurs with this merger. As the U.S. gets down to 3 major carriers, look for tightening of frequent flyer miles programs. Less competition means less need to give incentives to customers. Sorta like the old communist days: Wanna fly? Good, it’s called ‘Airline’.

  6. @travelbug : AA’s website is still somewhat weak in terms of booking partner awards. even something as basic as nonstop flights on CX is not bookable online.

  7. I’m an amateur with about 350k scattered between accounts plus Avios. I would prefer to stay Star Alliance just because I see more flexibility and better deals for redeeming. Maybe not as good of products overall but I’d rather go more places with average service I guess. Maybe I’m still bitter since AA pulled its hub from STL.

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