American Airlines: Challenges Ahead Include Merging Systems, Changing Alliances, and Aligning In-Flight Service

An American Airlines jet taking off in Dallas

The new American Airlines will face myriad challenges beyond keeping frequent flyers happy, and deciding whether to keep its current livery. Key milestone dates include January 7, April 1, and September 1, which include a major alignment of US Airways’ product to American’s.

American, which received permission from a bankruptcy court judge last Wednesday to emerge from bankruptcy proceedings and merge with rival US Airways, plans to close the transaction and merge on December 9.  The merger will be the fifth major airline merger since 2005, and will make American Airlines the world’s largest airline, displacing United Airlines, the current titleholder, and Delta Air Lines, which took the title away from American for several years by merging with Northwest Airlines.

The post-merger airline will be called American Airlines Group and will retire the AMR name.  It will be headquartered at American’s current location in Fort Worth.  While US Airways will continue to operate as a separate airline for the time being, it will adopt much of American’s practices and approaches to in-flight service.

The new American Airlines will have 94,000 employees, 950 planes, 6,500 daily flights, eight major hubs, and yearly revenue of roughly $39 billion. It will be the leader in several markets including the East Coast, the Southwest, and South America, although it will continue to be overshadowed by Delta and United in service to Europe and Asia.

As previously announced, Tom Horton, American’s CEO, will become non-executive chairman and a member of the board.  Doug Parker, US Airways’ CEO, will serve as CEO of American Airlines Group.  Scott Kirby, US Airways’ president, will keep that title at American.

Besides the new name effective December 9, the first sign that customers will see of the merger will be on January 7, 2014, as the airline takes the first step of tying together frequent flyer programs from American and US Airways.

UPCOMING MILESTONES

January 7 will be “a big day for us,” Kirby told Frequent Business Traveler in an interview earlier this month.  “We will become a single airline or at least take the first step of becoming a single airline [on that day, and] offer reciprocal frequent flyer benefits,” he added.

Kirby also told Frequent Business Traveler that there was a “silver lining” to the delay that followed the Department of Justice’s antitrust suit that will result in a “more seamless customer interface” on January 7.

Another milestone date will occur approximately seven to nine weeks thereafter, when US Airways leaves Star Alliance, an airline alliance that counts United Airlines and Lufthansa among its members, and joins oneworld alliance approximately a month later, according to information provided to Frequent Business Traveler by two individuals familiar with the matter.

Star Alliance, founded in 1997, is the world’s largest airline alliance and currently has 28 members.  Oneworld, founded in 1999, has 13 current members. American Airlines is a founding member of oneworld.

ALIGNMENT OF PRODUCT

American and US will slowly begin to align their product offerings, including meals, in-flight entertainment, and seating.  The merged airline will use the current American product as its template and, as a result, the current US Airways product will be greatly enhanced to ensure uniformity across both airlines until they are merged under one operating certificate.

There are two additional key dates later in the year, according to people familiar with the matter.  On April 1, US Airways will adopt American’s meal windows and catering, and on September 1, the US Airways soft product (i.e. in-flight service) will mirror American’s.  Also by that date, new aircraft being delivered to US Airways will have the new AA interiors.  A spokesman for US Airways would not comment specifically about these plans.

Click here to continue to Page 2 – Management Team Appointments, Cultural Differences, and American’s To-Do List

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