American Airlines, US Airways merger talks start

SCOTT MAYEROWITZ AP Airlines Writer Published:

NEW YORK (AP) -- American Airlines and US Airways are one step closer to a potential merger.

The companies said Friday they signed legal documents allowing them to confidentially exchange information. But a deal is still far from reality.

"It does not mean we are merging -- it simply means we have agreed to work together to discuss and analyze a potential merger," US Airways CEO Doug Parker said in a letter to employees Friday.

Such a merger would put the combined airline on par with the world's largest -- United Continental Holdings Inc. -- and the slightly smaller Delta Air Lines.

Parker has been pushing for a merger since American's parent company, AMR Corp., entered Chapter 11 bankruptcy protection on Nov. 29, 2011. American Airlines CEO Tom Horton has said his airline is weighing several options, including remaining independent or merging with one of several airlines, including US Airways Group Inc.

In a note to all American Airlines managers Friday, the airline said it is cutting its expenses in bankruptcy court and is "also now looking at other strategic options that could make the new American even stronger."

The signing of non-disclosure agreements means the companies will not share their discussions with outside parties. The airlines warned in a joint press release that they will not "provide any further announcements regarding the status of any such discussions unless" a merger is ready to be announced or if the talks fall apart.

US Airways' stock price rose nearly 4 percent to $10.89 shortly after the market opened Friday. The merger talk announcement came before trading began.

Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.