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US Airways, American complete merger; now, the work starts

    Tony Gutierrez - AP
    U.S. Airways CEO Doug Parker smiles as he responds to a reporters question during an interview at AMR headquarters, Wednesday, Dec. 4, 2013, in Fort Worth, Texas. American Airlines and US Airways seem an unlikely couple, even to the man who will lead the combined company after their merger on Monday.
    Paul Moseley - MCT
    Former American CEOs Tom Horton (left), and Robert Crandall (right, glasses) applaud as new CEO Doug Parker (center) rings the NASDAQ bell, as hundreds of employees of the new American Airlines gather at the company's headquarters near DFW Airport to remotely ring the NASDAQ bell after the merger of American Airlines and US Airways, Monday, Dec. 9, 2013.
    Former American CEOs Tom Horton, left, and Robert Crandall applaud as new CEO Doug Parker, center, rings the Nasdaq bell backed by hundreds of employees of the new American Airlines, gathered at the company’s headquarters in Fort Worth near DFW Airport.

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  • Court hearing in commission case canceled

    The city of Charlotte on Monday voluntarily withdrew part of its case against the new Charlotte Airport Commission, resulting in the cancellation of a hearing scheduled for Wednesday.

    Charlotte has sued to block the commission, and obtained a preliminary injunction stopping the commission from using most of its powers.

    In its case, Charlotte argued that the legislature improperly voided the city’s contracts with businesses at the airport by passing the law removing control of Charlotte Douglas from the city. The city withdrew that claim.

    The city still has an outstanding claim that the legislature preempted the Federal Aviation Administration’s authority by passing the commission law. The FAA hasn’t said whether or not the commission should be allowed to run the airport, and only the FAA has authority to issue an airport operating certificate.

    Another hearing has not been scheduled in the case.

    Ely Portillo

  • Intermodal yard begins operations

    A new, $92 million rail freight yard built between two runways at Charlotte Douglas moved its first cargo on Monday. The new Norfolk Southern yard is set to replace the company’s existing rail yard just north of uptown.

    The intermodal yard, as it’s known, moves freight from trains to truck and vice versa, speeding the shipping of goods to and from coastal ports.

    Norfolk Southern spokesman Robin Chapman said Monday’s first cargo operations were a soft opening for the facility, which the company expects to complete next year.

    Norfolk Southern is paying $76.3 million of the construction costs, with a federal grant picking up the rest. North Carolina and the city of Charlotte have funded $9.7 million worth of road improvements tied to the project, including a new interchange at Interstate 485 and West Boulevard to allow trucks easy access to the facility.

    The railroad will pay the airport $1 million in annual rent.

    Ely Portillo

US Airways and American Airlines completed their $17.8 billion merger Monday, creating the world’s biggest airline, with more than $40 billion worth of revenue and 100,000 employees. Now, executives said, the hard work starts.

Charlotte Douglas International Airport is the new American Airlines’ second-largest hub, with about 7,500 employees and 660 combined daily departures. At the airport Monday, employees wheeled sheet cakes with both companies’ logos and “Building the new American Together” written on them, while in Dallas, new American CEO Doug Parker remotely rang the Nasdaq’s opening bell, surrounded by cheering employees.

Airline executives continued to predict growth for the new American at Charlotte.

“In the very near future, our plans are to go up to 700” daily departures, said Terri Pope, US Airways’ – and now American’s – vice president for Charlotte. “A lot of work is ahead, the bulk of the work.”

Like many airline employees, Pope has been through her share of mergers, starting with Air Kentucky and going through combinations with PSA, Piedmont, USAir and America West. US Airways-American will be her fifth such combination.

“The feel of this one is different,” Pope said. “We know we’ll be stronger.”

Growth and more construction

Interim aviation director Brent Cagle predicted the merger will fuel more new construction at Charlotte Douglas, which is already in the midst of $141 million worth of projects to replace the hourly parking decks and the entrance road.

“The international facility now is undersized, and we need to expand that, especially if we’re going to add flights,” Cagle said.

The new international concourse planned at Charlotte Douglas would occupy the space currently occupied by the rental car lots, which will move into the new hourly parking decks in November 2014.

“I think in the next 12 months, we’ll finish design and start early construction on a new international facility,” Cagle said.

He said the airport will probably issue new bonds backed by Charlotte Douglas’ revenue within 8 to 10 months to fuel the expansion.

The new American carries between 85 and 90 percent of Charlotte Douglas’ passengers, and operates more than 90 percent of the daily flights. Most of those flights are US Airways – about 640 – while American flies about 20 small regional jets to three of its hubs daily.

Kenji Hashimoto, senior vice president for regional carriers, said Charlotte Douglas will be the busiest hub for regional jets in the combined company. The carriers also will have to combine their US Airways Express and American Eagle operations as well as their mainline fleets.

The combined company, called American Airlines Group, has its headquarters in Fort Worth. US Airways CEO Parker has the top spot at the new company. American’s stock, trading under the symbol AAL, closed up 65 cents, or almost 3 percent, at $24.60 a share in its first day of trading.

Frequent-flier programs to merge

For employees and travelers, visible changes will start soon. Although the airlines will continue to run separately for about 18 to 24 months as they work to combine their operations, they’ll start merging frequent-flier programs in January.

The companies will combine their management and support staff vacation policies starting Jan. 1. US Airways employees with a email address will get addresses starting Jan. 7.

“It’s now time to give Delta, United, Southwest and the rest of this industry a run for their money,” said Elise Eberwein, executive vice president of people and communications, in an email to employees. “Let’s stay focused on beating the competition above all else. That is our mission.”

Parker, who previously was US Airways’ CEO, said smoothly combining the two airlines’ thousands of systems and procedures will be a challenge.

“The biggest challenge is going to be the operational integration,” Parker said in Fort Worth. “It’s not going to be easy.”

Analysts were mostly supportive of the merger but agreed that operational issues as a result of the merger could disrupt the new company.

“The main risk is now merger integration,” wrote Michael Derchin, of CRT Capital Group. “We believe management knows from personal experience (US Airways/AmericaWest merger) and recent industry successes and failures, how to get it right.”

The companies also will have to combine their unions. Some signs of discord have already emerged: The flight attendants for the two companies are feuding over which company’s union should ultimately represent them. But Monday, unity was the word of the day.

“Since the announcement of this merger we have met every challenge through unity,” said Roger Holmin, president of the Association of Flight Attendants-CWA, which represents US Airways flight attendants. “We expect to continue as full partners in this merger, in terms of what we bring to its success and the equal share of benefits we receive in recognition of our efforts.”

Who will control CLT?

Even as the executives and airport officials celebrated Monday, the issue of who will run Charlotte Douglas still hung over the background.

“The legal wrangling going on certainly creates background noise,” said Cagle, who said he’s focused on running the airport efficiently.

Pope praised the city’s collaboration with US Airways and its predecessors through the years. She said the relationship is as strong as ever. But Pope also spoke warmly of former aviation director Jerry Orr, who was removed from his city job in July after the N.C. General Assembly passed a bill removing control of Charlotte Douglas from the city.

Orr is executive director of the Charlotte Airport Commission, which is fighting a legal battle to take control of Charlotte Douglas. Pope credited his low-cost philosophy of airport management with helping keep the city an airline hub.

“I think it’s a great moment for Jerry Orr,” Pope said of the merger.

Orr said he was encouraged about the airport’s future.

“We’ve been partners with an airline that’s been through some ups and downs,” he said. “The downs were pretty dismal, but I think the future is bright.” The Fort Worth Star-Telegram contributed.

Portillo: 704-358-5041; Twitter: @ESPortillo
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