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Merging American Airlines with US Airways

One year ago, the future of American Airlines and that of its workers in Virginia was murky. In fact, there was speculation as to if the airlines would even move forward. But the merger of American Airlines with US Airways has culminated in a story that has brought the financially riddled company back from bankruptcy to be known as the world's largest airline.

The business transaction upped the worth of the company to more than $19 billion as company stock prices continue to rise. Investors seem to have renewed confidence in the company since the merger. More than two years of bankruptcy have ended as creditors have been repaid and stockholders have even won small shares.

However, the rocky path back to financial stability was far from easy. First, the company had to emerge from bankruptcy, and then the merger had to receive federal clearance. At the beginning of 2013, the former American Airline chief executive officer planned to reduce labor costs with fewer employees and frozen pensions. He wanted to upgrade planes as well. The company entered a deal with US Airways in February that seemed to be the cure. However, the proposed merger met with glitches in August when the Department of Justice sought to block the union on antitrust grounds. A settlement was eventually reached, allowing the transaction to go forward. While the uncertainty about the future is far from over, the newly merged company is looking ahead to the challenges.

A business merger can run into complications, especially if it involves two large companies. A commercial attorney might be able to help clients with the legal aspects of the transaction.

Source: Tulsa World, "No. 1 business story of 2013: American Airlines merger", Kyle Arnold, December 22, 2013

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