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US Airways and American Shake Hands (Update 2)

Tickers in this article: AAMRQ.PK LCC

" I look forward to working closely with Doug Parker, whom I have known as a friend for more than 25 years, and with the leadership teams of both companies to assure a smooth integration and the creation of a new industry leader," Horton said.

Existing US Airways stockholders will receive one share of common stock of the combined airline for each share of US Airways common stock then held: in sum, they will hold 28% of the new company, while the remaining 72% will be issued to stakeholders of AMR and its debtor subsidiaries. In an unusual development for airline bankruptcies, shareholders in bankrupt AMR will receive at least 3.5% of the combined company. They would receive more than 3.5% if other claims are first paid in full.

"It is unusual in Chapter 11 cases -- and unprecedented in recent airline restructurings -- for shareholders to receive meaningful recoveries," Horton said.

The plan requires approve by the U.S. Bankruptcy Court in New York, by US Airways shareholders and by regulators. The combination is expected to be completed in the third quarter of 2013.

The carrier expects to provide the most service of any carrier on the East Coast and in the central regions of the U.S., to expand its presence in the West, to bolster American's dominant position in Latin American and the Caribbean and to serve 21 destinations in Europe and the Middle East. US Airways will shift from the Star Alliance to the Oneworld Alliance, in which American is a founding member.

The carrier will take delivery of more than 600 new aircraft, including 517 narrowbodies and 90 widebodies, from Airbus and Boeing over the next decade.

In the immediate future, no changes are planned to the two carriers' frequent flyer programs, the carriers said. "Upon merger approval, additional information will be provided to customers of both frequent flyer programs on any future program updates, including account consolidation or benefit alignment," they said.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed