Inside the world's biggest airline merger

  @FortuneMagazine February 28, 2013: 9:10 AM ET
AMR18 tom horton

AMR CEO Tom Horton in an American Airlines Boeing 777 at the Dallas/Fort Worth Airport

(Fortune)

Tom Horton had barely taken his first sip of tea around 8 a.m. on April 20 of last year when he received a surprise call from Doug Parker, chief of US Airways. "I'm trying to send you a letter by e-mail," Parker told Horton, the lanky chief of American Airlines' parent, AMR Corp., who was lounging in his Fort Worth office festooned with airline memorabilia and a framed photo of his childhood neighbor, astronaut John Glenn. "Doug was sending the e-mail from home, and he kept hitting send, but it wasn't sending," recalls Horton. "We had a funny e-mail exchange where I said, 'Hey, Doug, we have good IT people who could help you out.' "

When he finally clicked on the attachment, Horton's amusement dissolved into deep distress. Horton had long feared that the crafty Parker would raid American once it filed for bankruptcy, which it had done the previous November. But this merger proposal was more audacious than anything he'd envisioned. The three-page letter began: "I am now more than ever certain that, by virtue of the significant synergies created by a combination of AMR and US Airways, a combination transaction can in fact expedite rather than delay AMR's emergence from Chapter 11 and preserve 6,200 jobs otherwise at risk." As Horton read on, he found the terms of the proposed union astounding. US Airways, a scrappy carrier about half the size of American, would take a controlling 50.1% stake in the newly formed carrier -- which strongly suggested that Parker was anointing himself, not Horton, to run what would become the world's largest airline.

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