Bloomberg News

AMR Merger Links Lindbergh Roots With Hudson ‘Miracle’

February 14, 2013

The merger of AMR Corp. (AAMRQ:US)’s American Airlines and US Airways Group Inc (LCC:US). unites carriers whose paths diverged after their creation during the early days of U.S. air- mail flights.

American got its start in 1926 when Charles A. Lindbergh flew a postal route with a DH-4 biplane for one of the carrier’s forerunners, Robertson Aircraft Corp. While US Airways also cites those ties, the modern-day carrier was still being reshaped through deal-making as recently as 2005.

“The two are not the same pedigree,” said Ray Neidl, an independent analyst in Connecticut with more than 20 years of experience covering the industry. “American was a pioneer in aviation, and US Airways was sort of cobbled together in the 1960s and 70s.”

American’s name will be retained on the merged carrier, extending the brand to embrace its own innovations such as the Sabre reservation system and US Airways’ most-iconic moment: the 2009 water landing in New York dubbed “The Miracle on the Hudson” by pilot Chesley “Sully” Sullenberger.

The merger also will return American to the top spot in the global traffic rankings. The airline ceded that crown and fell to No. 3 in the U.S. as rivals merged in the past five years, and US Airways is No. 5 among its domestic peers.

Consolidation among American’s predecessor companies in the post-Lindbergh years created a passenger carrier that by the end of the 1930s had cemented its place as the biggest domestic airline based on traffic, according to the Fort Worth, Texas- based company’s website.

Coach Seats

In 1948, American added coach seats as a cheaper alternative to first-class travel, and in the 1980s it offered an “AAirpass” with a fixed cost for travel over periods as long as a lifetime. Sabre (TSG:US) grew out of an American-International Business Machines Corp. (IBM:US) project in the 1960s, when it was the largest electronic data-processing system for business use, and was spun off in 2000.

American’s history includes the day considered the darkest in U.S. aviation: Sept. 11, 2001. Hijackers crashed one of its planes into the north World Trade Center tower in New York and another into the Pentagon.

US Airways’ origins date to the 1930s when a predecessor called All American Aviation flew mail. The company later rechristened itself Allegheny Airlines after the mountains and river of the same name in the eastern U.S. that the carrier’s planes crisscrossed each day.

New Name

In the 1970s it bought Mohawk Airlines to add service throughout New York and New England, and in 1979 the company changed its name to USAir to reflect new service to states including Arizona, Texas and California after airlines were deregulated.

The 1980s saw USAir buy Piedmont Airlines and Pacific Southwest Airlines, which was the largest merger in airline history at the time, according to the company’s website. In 1997, the carrier again changed its name, to US Airways, and adopted a red, white, blue and gray livery.

Even with the deal-making, US Airways remained outside the top ranks of the U.S. industry. It ended 1999 as No. 7 in the U.S. by traffic, ahead of Trans World Airlines (TWAIQ:US), which American would buy in 2001 to become the world’s largest carrier.

“Relatively speaking, US Airways is pretty young,” said Henry M. Holden, an aviation historian and author of 37 books who lives in Newton, New Jersey. “Merging with one of the big originals like American changes everything for them.”

American’s bankruptcy filing on Nov. 29, 2011, came after most of its U.S. peers restructured in court in the past decade, a group that included US Airways -- twice.

US Airways’ second go-round, in 2004, preceded its last merger before the American tie-up. America West Holdings Corp. Chief Executive Officer Doug Parker combined the Tempe, Arizona- based carrier with US Airways, kept the bankrupt airline’s name, and led the merged company out of bankruptcy in 2005.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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