World's biggest airline created by US carriers' merger

American Airlines and US Airways have agreed an $11bn (£7bn) merger that will create the biggest airline in the world with some 1,500 planes, more than 3,000 flights every day, and 100,000 staff.

The combined business will fly under the American Airlines brand, but be run by US Airways' chief executive, Doug Parker. American's top executive, Tom Horton, will serve as a temporary chairman until the middle of next year.

Fears were raised that prices would rise as a result: after the deal, a combined AA-US airline plus Delta and Southwest will together control three-quarters of America's flight traffic.

"A US Airways-American combination poses potential concerns for competition and consumers," said Diana Moss, vice-president of the non-profit group the American Antitrust Institute. Its study found ticket prices rose 30 per cent on some United-Continental routes and 20 per cent on some Delta routes after their mergers.

Mr Parker said: "Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to go."

British fliers are likely to be affected as International Airlines Group, the owner of British Airways and Iberia, has a joint venture with AA that sees the airlines share transatlantic routes, schedules and fares.

"From IAG's point of view, we think this deal is good news as it creates a much stronger US partner and boosts the scope of the transatlantic joint venture," said the aviation analyst Edward Stanford at Oriel Securities.

Although the deal still has to be approved by competition regulators and a US bankruptcy court, the US Justice Department has not challenged an airline merger since a proposed United-US Airways tie-up in 2000.

The merger is the third major US airline deal since 2008, with United combining with Continental, and Delta buying Northwest.

US airlines have faced major turbulence over the past decade, with Delta, Northwest, United, American and US Airways all filing for bankruptcy protection to keep their assets safe from creditors while they restructured. AA remains in Chapter 11 protection: its bankruptcy creditors will have 72 per cent of the company, with US Airways investors owning the rest.

US airlines struggled in the aftermath of a plunge in demand following the September 11 terrorist attacks, and used the bankruptcy protection to counter the effects of high wage bills and rocketing fuel bills.

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