American & US Airways To Merge

Last night the boards of American Airlines and US Airways agreed to merge and create what will become the world's largest airline. The new company will bear the American name and will be headed by the current CEO of US Airways.

American has been restructuring under bankruptcy protection since late 2011. AMR creditors and possibly its shareholders will own 72 percent of the stock, and US Airways Group Inc. shareholders will get the rest, three of the people said. A formal announcement is expected Thursday morning. If the deal is approved by AMR's bankruptcy judge and antitrust regulators, the new American will have more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates. It will be slightly bigger than United Airlines by passenger traffic. Since 2008, Delta gobbled up Northwest, United absorbed Continental and Southwest bought AirTran Airways. If this latest merger goes through, American, United, Delta and Southwest will control about three-quarters of U.S. airline traffic.

Consumer advocates say the reduction in carriers will make it easier to increase fares.