More on the likely effects of US Airways-American merger

American Airlines was once the carrier of choice for celebrities between New York's JFK Airport and Los Angeles, boasting top-notch service and one of the best frequent-flier programs around.

Following the September 2001 terrorist attacks, when air travel faltered and some airlines bit the dust or filed for bankruptcy, such as US Airways twice in the 2000s, American did not.

But after a spate of megamergers that shrank the industry, American fell behind. Management did not innovate, the airline's on-time performance fell, customer complaints rose, and once-loyal customers defected to competitors.

Enter scrappy US Airways Group Inc., which last week nailed the merger it had wanted for years, to combine with the much-larger American and create the world's biggest airline.

US Airways CEO Doug Parker, who will lead the new company, pledged to restore the "iconic" American brand to preeminence with 6,700 daily flights around the globe.

With the agreement inked, and investor calls over, the hard work begins - meshing separate computer systems and reservation networks, combining labor groups, optimizing flights, culling the best of each airline's frequent-flier programs, and winning business travelers back.

It won't be easy, but the good news is that Parker and his crew have done it before - combining America West with US Airways in 2005. "We know what to do and know what mistakes to avoid," Parker said.

After regulatory approval, and when the $11 billion deal closes between July and September, Tom Horton, American's CEO during the bankruptcy restructuring, will get a $19.9 million payout - $9.94 million in cash and the rest in stock, according to a regulatory filing.

He will remain chairman until the first joint shareholder meeting in 2014. Parker, in the meantime, will select a new management team.

CrankyFlier.com author Brett Snyder, who once worked for America West and United Airlines, offered some advice to Parker and his team last week.

"Realize you are not US Airways," he wrote, adding that some skeptics think US Airways management will "come in and run American like US Airways. That, to me, is a silly notion, and it would fail."

Management needs to "quickly get into the mind-set" of running a great global airline. Let employees at US Airways headquarters in Arizona and at American's offices in Fort Worth know where they stand - and whether they have jobs, Snyder wrote.

"There are key people - and processes - that epitomize the old American, and those need to be swept out quickly."

Protect American's "brand assets," and none is more important than AAdvantage, "one of the best frequent-flier programs out there," Snyder said. "Focus on the things that really have strong value" in order to "bring people back to the airline."

Brian Kelly, founder of ThePointsGuy.com, a blog and website for maximizing airline frequent-flier miles and credit-card points, said, "A lot of American frequent fliers are saying, 'If this merger happens it could be good - more routes, more planes to fly. But don't dismantle all the really good perks that American has built in.' "

American caters to its top customers. "When you hit 100,000 miles on American, they give you eight upgrade certificates that are good on any fare, on any international flights," Kelly said. "US Airways, in comparison, will give their Chairman Preferred fliers two."

American fliers can redeem for one-way miles awards at half the price of a round trip, while US Airways charges for a full round-trip. Awards with American start at 12,500 miles, whereas US Airways charges a minimum 25,000 miles, he said.

Jeffrey Erlbaum, president of ETA Travel in Conshohocken, said consumers were interested in what policies would be implemented. He said miles were easier to redeem in American's frequent-flier program.

"What interests me are little things, such as their ticket change policy," Erlbaum said. "Currently, US Airways has one of the most restrictive policies on ticket changes. For example, when you purchase a $750 ticket and cancel that reservation, if you were to use the ticket toward a lower price, say $350 ticket, you would forfeit the difference and still have to pay a $150 change fee. American allows you to deduct the $150 from the difference and get a credit for the rest."

Parker has said all the hubs will remain, including JFK in New York for American, and Philadelphia, an international hub for US Airways.

JFK and Philadelphia, although geographically close, "are dramatically different in the way we fly traffic in and out and through them," Parker said. "We don't view them as competing whatsoever."

Erlbaum says Philadelphia could get less international service in the future, as American bolsters its position in New York to compete with Delta, United, and other international-based carriers. "Philadelphia is a big market, so we will continue to have good service, but I wouldn't be surprised if the number of international flights decreases."

Snyder, of the CrankyFlier, said making the network more competitive will "undoubtedly" mean cuts in some places, additions in others, and shifting resources.

"All the hubs may remain in some form, but they will end up looking different after the network has been rebuilt, and they might not all even look like hubs," he said.

A big issue is what American will do about flying to Asia, where the airline is a small player. Philadelphia airport officials hope to get those Asia flights here.