Doug Parker, taking over the new American Airlines Group Inc., wants to beat a $1 billion goal for added revenue and savings in the AMR Corp.-US Airways Group Inc. merger and is about to start meshing frequent-flier plans.
“I’m hoping it’s a number we can exceed,” said Parker, who was chief executive officer at US Airways. “It’s not easy. It’s not a given by any means.”
Parker, 52, takes the helm of a carrier that will sit atop the global industry by traffic after the $17.8 billion all-stock deal. He has to knit together two networks to challenge United Continental Holdings Inc. and Delta Air Lines Inc., which now rank first and second in the world.
Some rewards program benefits will be offered beginning in early January, sooner than in other tie-ups, Parker said. Frequent fliers with elite benefits will be able to earn and use both airlines’ awards and loyalty lounges starting then. Other members will get equal status in both plans later.
Frequent-flier perks are an important tool to win repeat customers, especially among business travelers who typically pay the highest fares, and wooing more of those passengers will help Parker meet his goal of boosting revenue. A merged loyalty program would have more than 100 million members.
“Six to nine months from now, you as a customer should have all the benefits you have on both carriers, but now on a much bigger airline,” said Parker, who succeeds American CEO Tom Horton, 52. Horton will serve as chairman of the merged airline until its first annual meeting.
The merger closing came on the same day that American parent AMR Corp. exited bankruptcy. Within a month, American and US Airways will begin phasing in the sharing of booking codes so each can place travelers on the other’s flights. Their merger timeline projects that regulatory approval to operate as one airline will take 18 months, and until then flight crews will remain separate and the carriers will fly under their existing names.
US Airways shareholders will get 28 percent of the stock in American Airlines Group, while AMR creditors, unions, certain employees and equity holders will get the rest.
The current American is now the third-biggest U.S. airline, and US Airways is fifth-largest. United and Delta each orchestrated mergers since 2008, leaving American with a smaller network in an industry where broader route systems help attract corporate travel contracts.
Parker’s target for so-called synergies is a net figure, so American will have to generate “more like $1.5 billion” in annual sales gains and reduced expenses by 2015 to cover a $400 million-a-year jump in labor spending for pay raises, he said.
Revenue benefits will start relatively quickly, said Parker, whose temporary office at American is a space normally used by visiting executives and is devoid of the aircraft models and personal touches common for the suites of airline CEOs.
Savings from steps such as paring the number of managers and combining airport facilities will occur within months while others, like meshing information technology systems, will take longer, Parker said.
The “top job” over the next year will be to combine the airlines without major disruptions in their operations, he said. Integrating reservation systems snarled flights after the 2010 merger that created United Continental, and disabled some airport kiosks and caused delays following the 2005 tie-up between Parker’s America West Holdings Corp. and US Airways.
Still undecided, Parker said, are what plane-maker will win a pending regional-jet order for American and whether an aircraft paint design will be created for the combined carrier.
There are “no immediate plans” for the merged American to divest its American Eagle regional partner, Parker said. AMR had decided to shed the commuter carrier before seeking bankruptcy protection on Nov. 29, 2011.