Now that we're only a month away from the one-year anniversary of the merger between American Airlines and US Airways, it's time for a status update on the situation for the new American Airlines Group (NASDAQ:AAL).
Stock performance and distributions for AMR shareholders
Like most other airline stocks, shares of American Airlines Group finished out 2013 strong and continued their momentum into 2014. Since closing at $24.60 on Dec. 9, 2013, the official date of the merger, shares of the airline have gained over 60% to close at just under $40 on Oct. 25.
Shareholders of the bankrupt American Airlines parent company AMR have also benefited greatly from the distributions of American Airlines Group stock they received. Shares of AMR last traded at $11.39 before the merger, and each of these shares has received distributions of roughly 0.74 American Airlines Group shares. At the Oct. 25 close of $39.82, these AMR shares have returned nearly $30 worth of AAL shares per AMR share for a gain of almost 160% since the merger.
What it means for travelers
American Airlines Group has been quick to point out the benefits this merger has for travelers. On its website, the airline provides the following list of things it has done for travelers since January.
The opportunity to earn and redeem AAdvantage miles when flying on American or US Airways, with all eligible travel on either airline counting toward elite status qualification in the program of your choice.
Select reciprocal benefits for elite status members when flying either airline, including First and Business Class check-in, complimentary checked bags, and priority security and boarding.
Access to more than 50 clubs across our combined network.
Easy access to the combined company's expanded network through our codeshare with US Airways, which allows each airline to sell seats on each other's flights.
Bringing US Airways into the award-winning oneworld alliance, offering more options across the Atlantic and an easier and more rewarding global travel experience to Europe and beyond.
The ability to easily stay connected while you fly with Monthly Traveler and Daily Wi-Fi passes, which are valid on both American Airlines and US Airways flights.
Most of these fall into the category of shared perks that allow the merged airline to offer more benefits than either American Airlines or US Airways could on their own.
The move of US Airways into the OneWorld alliance and the beginning of codesharing allow the merged airline to take advantage of a larger combined network before completing the full integration into one airline.
Earlier this month, American Airlines Group completed the combination of the American Airlines and US Airways cargo operations under a single waybill. Although it will be early 2015 before American Airlines Group expects to have a single operating certificate, the cargo combination should allow this side of the airline's business to move more smoothly.
Airline and system merging
Since they don't yet have a single operating certificate, American Airlines and US Airways are still technically operating as two separate airlines. But American Airlines Group expects that to change when it gets a single operating certificate in the first half of 2015.
From there, the airline will work on combining frequent-flyer mile programs and reservation systems through the rest of 2015. Flyers and investors should keep an eye on the technical integration side to see whether American Airlines Group can avoid the problems United Continental experienced during its own integration.
This has been a year of record profits for the airline industry, and American Airlines Group has been no exception. Whether compared with American Airlines, US Airways, or the results from each combined for previous years, the new American Airlines Group is coming out on top. Currently, analysts reporting to Nasdaq are forecasting earnings of $5.39 per share for 2014 and $6.82 per share for 2015.
For the rest of the year, company officials feel hopeful as well. When discussing Q3 2014 results, American Airlines CEO Doug Parker said, "We anticipate we will also post a record profit for both the fourth quarter and full year 2014."
An ongoing process
Mergers between megacompanies take years to fully execute, and the merger between American Airlines and US Airways is no different. This year has seen a lot of operational integration, including gate moving, codeshare development, cargo combining, and aircraft painting. Meanwhile, American Airlines Group has grown profits along with the rest of the industry, with analysts forecasting even greater earnings in 2015.
Going forward, investors and travelers should keep an eye on how American Airlines Group progresses toward obtaining a single operating certificate and finishing the technical integration of its systems.
Alexander MacLennan owns shares of and has options on American Airlines Group. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.