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What Would an AMR-US Airways Merger Mean for the Industry?

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  • Description

    FBN’s Gerri Willis on the potential merger between AMR and US Airways.

  • Duration 3:28
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Well they've said it would happen for months now and it seems like the story of the airline who called wolf right.

But new reports are saying today American Airlines and US Airways are closer than ever two way deal to merge.

And -- it could be announced next week.

I'll get into what that means for flyers in a minute but first what does it mean for the industry.

For starters it would create the world's biggest airline.

The new company would have a market cap of more than ten billion dollars much higher than that of the United Continental merger the current title holder.

In fact the new American would be nearly two and a half percent larger by capacity.

And more than 2% larger -- traffic.

Now who would illness -- well those details still -- -- worked out but reports say American creditors creditors would -- about three quarters of the new company.

US Airways shareholders about a quarter now notice I said creditors vs shareholders.

American has been wallowing in bankruptcy since the end of 2011.

And in the first quarter of this year they posted a one point seven billion dollar loss sell this deal would bring them out of the hall.

And as a result of a string of bankruptcies in this industry mergers have become the -- black case.

No carrier that has gone into bankruptcy since 2000 have survived without a merger that's what industry insiders say.

United emerged with continental Airways merged with America west delta and northwest both filed Chapter Eleven and ended up merging with each other cell.

The good news for consumers this has happened many many times before so many of you out there know what to expect.

-- stop any changes resulting from the merger won't be felt for awhile.

So if you've already booked a flight for your spring break don't panic.

According to the Wall Street Journal the airlines wouldn't be able to start making changes.

Until after the merger gets approved by a bankruptcy judge at a department of justice and that's gonna take months to happen.

But when those changes do occur the biggest one you'll -- biggest change LC is rising airfares.

-- there will be fewer airlines to choose from competition will be less thanks to principles of supply and demand.

Couple that with rising fuel prices and one -- you get higher ticket prices.

You probably don't have to worry about -- -- and service like the other mergers.

Since the two carriers roots are very similar and the new American will likely maintain services to its 320.

Combined destination.

The big questions surround the frequent flier programs you -- -- know about that right since American and US Airways have very different approaches to these perks.

Now and needs to be said you will not lose the miles you've already wrapped up again -- -- miles aren't gonna go away at least if history is any guide.

When program submerged in the past miles from both -- merged into a single account which is.

Actually good news if you bit crude at miles from both airlines.

But this is gonna remain American Airlines according to Smart travel back -- The most likely scenario is -- Americans one world alliance will be the awards program that stays in place.

However since the management team from US Airways is most likely gonna be in control.

That can mean a serious lack of a word seat availability something American practices that US air treats as -- -- expense.

As -- said.

This could -- be -- of the deal doesn't get approved by the big -- in Washington either way.

These big airline mergers are here Tuesday and that could only be bad -- -- at least in terms of prices.

In the long run.

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