You can read the details of the US Airways & America West merger here.
Or you can read the summary here:
The new airline will be called US Airways, but it will be based in Tempe (America West’s headquarters) and be lead by America West CEO Doug Parker.
The airlines will operate separately for 2-3 years, but integration of schedules and frequent flyer plans will begin soon.
The combined company will have about $10 billion in revenues and $2 billion in cash putting it in pretty good financial shape, amazingly. The press release notes that the combined group will be profitable with oil at $50/barrel.
Investors (read the release for the details) will infuse about $1.1 billion in cash into the company, showing an incredible faith that this will work out.
The airline will eliminate almost 60 planes from its fleets, and have primary hubs in Charlotte, Philadelphia, and Phoenix, with secondary hubs in Las Vegas and Pittsburgh.
America West, which was trading at $4.80 today has an implied valuation of $6.12 per share. Trading is currently halted.
There you have it. The press release talks a lot about synergies between the two companies, and study after study have shown that these synergies tend to never appear. However, I’m going to give these guys the benefit of the doubt because I have great faith in Doug Parker. Even so, integrating these two incredibly different cultures will be difficult, and it’s going to be a rocky ride for passengers for a little while as they iron out the kinks. In the meantime, though, the two airlines will continue flying on their own, and, here’s the best news, your US Airways dividend miles will actually be worth something again.