What Does the US Airways and American Airlines Merger Mean For You?

Not to pat myself on the back, but seven months ago I predicted--

...It appears the combined airline will take the American Airlines name, maintain its headquarters in Fort Worth, and be run by US Airways CEO Doug Parker. Apparently, Parker has caved into all AA labor demands and will attempt to use the AA labor contract to finally bring an end to the labor standoff between US West and US East. Recall that although America West and US Airways "merged" in 2005, the two carriers still essentially operate as separate airlines...

So what if I got my dates off a bit! ;)

Here's the merger scoop from The Dallas Morning News:

  • 72 percent for AMR creditors and other interests, 28 percent for US Airways shareholders.
  • Doug Parker will be the chief executive officer.
  • Tom Horton will be the non-executive chairman, for only a limited period before he departs post-merger.
  • The plan is to announce the deal in the pre-dawn hours Thursday, followed by a 7:30 a.m. CST call with the analyst community, a Dallas/Fort Worth International Airport press conference in mid-morning, a 1 p.m. Dallas/Fort Worth Airport presentation to AA employees, with the video and audio broadcast to other locations.
  • After that Parker and his entourage will return to Phoenix to meet with US Airways employees.

I'll share more of my thoughts on the meger in the coming days, but I am already receiving frantic e-mails from clients about whether it is time to burn their US Airways or AAdvanrage miles. In a word, no.

No your miles won't go away.

If anything your miles will become more valuable over the next several months as US Airways and American will likely allow the transfer of miles between accounts. That means you theoretically will be able to use you American AAdvantage miles to book Star Alliance award trips and US Airways Dividend Miles to book oneworld awards (by transferring). Whatever the case, your miles will eventually be consolidated and there is no chance you will lose them.

Should I buy more miles now?

Not unless you have a specific trip planned. US Airways points remain a bargain and some gems remain on the US Airways award chart like business class from North America to Oceania for 110K miles or North America to Asia via Europe for 90K miles. Enjoy that while it lasts and if you are thinking about traveling later in the year, I always recommend starting early--it could be that ideal award space is available now.

Nothing will change in the near term.

A good source tells me that US Airways' departure from Star Alliance is months away. We know that the new AA will be part of oneworld, but that doesn't mean anything is going to change in the near-term. US Airways will continue to codeshare with United and you'll continue to earn Star Alliance credit for US Airways flights. Unlimited complimentary upgrades will continue for elites on US Airways while only Executive Platinum members will enjoy complimentary upgrades on AA...for now. All your booked trips are fine and if you booked a future trip on US Airways hoping to credit to United or another Star Alliance carrier, chances are you will still be able to do so.

Continue to book travel and awards as you normally would.

I mentioned above about the possible enhancements we might be seeing to the loyalty programs, but for now don't assume the two carriers are linked--because they are not. Buy AA tickets through AA, book AA awards through AA and do the same for US Airways.

* * *

We'll talk about winners and losers in an upcoming post, but I will foreshadow that discussion by saying that Star Alliance will lose one of its most underrated member with US Air's departure. In terms of award availability--particular domestic first class--US Airways is difficult to match. I just booked a family of five to Grand Cayman on the same US Airways flights with everyone traveling in first class! Furthermore, US Airways has invested tremendously in its new Envoy (business class) product and that seat beats all the competition (though AA's new 777-300ERs give it a run for the money).

For now, business will go on as usual. Panic not: your miles are safe and sound and life won't start getting bad for AA flyers for at least another few months...


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