Sources: American Airlines, US Airways on verge of merging

Tails of American Airlines, US Airways jetliners / Getty

Updated 7:10 a.m. EST

FORT WORTH, Texas A deal for American Airlines and US Airways to merge is likely to be agreed on early next week, sources tell CBS News.

The board of directors of Fort Worth-based American's parent company, AMR Corp., is slated to meet Monday to consider the agreement, and an announcement could be made the next day, CBS Dallas station KTVT-TV says.

Mark Drusch, a former executive at Delta and Continental Airlines and now the chief supply relations officer with Fareportal.com, says months of confidential discussions point to a deal. "It looks like it's really pretty close. But never say it's a done deal 'til it's done," he told KTVT.

The station has learned that American's CEO, Tom Horton, is likely to move out of the day-to-day managing of the new combined carrier, and instead get a seat on the new board.

US Airways CEO Douglas Parker will probably run the new airline, which would be named American Airlines and is seen as likely to stay headquartered in Fort Worth.

Sources have said there were concerns that, if Horton stayed on as CEO, there could be more of the operational problems like the ones American had last fall, such as delayed and cancelled flights.

"You're looking at what's best for the combined company, and right now it looks like the US Airways management taking charge is what unions and creditors want," says Drusch.

Airline analysts predict US Airways and its shareholders may get about 30 percent of the new airline, with AMR creditors getting about 70 percent.

Drusch says US Airways' strong 4th quarter profits can't be ignored in this deal. "At the end of the day," he told KTVT, "the US Airways shareholders are going to get more now than they would have one year ago, six months ago, three months ago."

Both the American and US Airways boards have to give the green light for the merger to occur. The judge overseeing AMR's bankruptcy also has to sign off on any agreement.

[hypnotoad72]

Higher customer prices, fewer workers, lower quality, (temporary) higher CEO profit ensues.

What else is new.

[Flymephx]

US Sc Airways, was one of the worst in the airline industry rankings for the past 7 years, since they merged with good old AmericaWest. Who pays for the absurd idea of a "Mega Merger"?, Front line employees with the worst pays scale in the industry! F.Y.I, US East vs US West, they are still on separate pay scales and separate contracts for the past 7 years and counting!! Get ready for another Merger Mess!!!

[thechooch1]

Flymephx you are right on with your post, name an airline merger that has gone smoothly with the employees happy. More mergers mean fewer choices for the public, leading to higher prices.

[PourpaixPourpaix]

Just what we need. Another huge business to run roughshod over you and me. As competition goes down, prices go up, and oh, by the way, let's fire anybody who gives great customer service because it means the CEO won't have the biggest boat in the harbor.

The best business action America ever took was to break up AT&T. The second best thing was breaking up Standard Oil. Both were incredibly abusive. An even better action would be to make sure large companies never became goliath companies. The only way a free market is functional is if there is enough competition to preclude the few from colluding.

[w_roos]

Why not name the new airline USAA?

[omearatho]

Nooooooooo....

Losing US Airways would be a disaster. They're far superior to AA. They operate preferable routes on preferable aircraft, with preferable catering. I even prefer their logo!

[thechooch1]

omearatho ratings don't agree with your feelings. USAirways was rated the worst among major US airlines in 2012. Check JD Power's rankings.

[glbetrkkr]

Preferable aircraft? Maybe on high-profile routes, or to major cities, but most of US's flights are outsourced on regional aircraft.