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AMR, US Airways agree to consider merger

US Airways has been urging AMR for months to consider its merger idea.
US Airways has been urging AMR for months to consider its merger idea.Kevin Lamarque / REUTERS

Updated at 12:30 p.m. EDT: American Airlines, which has resisted overtures from US Airways for months, has agreed to consider a potential merger, the two airlines said Friday.

A deal, which is still far from reality, would create an airline giant on par with the world's largest — United Continental Holdings Inc. and the slightly smaller Delta Air Lines.

USAirways CEO Doug Parker has been pushing for a merger since American's parent company, AMR Corp., entered Chapter 11 bankruptcy protection nine months ago.

Now the companies have taken a step toward that possibility, signing a non-disclosure agreement that allows them to share confidential information.

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

American Airlines CEO Tom Horton said in a note to managers that the airline is cutting expenses and "also now looking at other strategic options that could make the new American even stronger."

Horton and Parker, longtime friends who once worked together at AMR, met in Washington last month to discuss the potential combination, the Wall Street Journal reported at the time.

AMR has been under pressure to consider a merger from some bondholders, who have a major say in whether the airline can emerge from bankruptcy as an independent company.

"I think a transaction will occur," said airline industry analyst Robert Mann of R.W. Mann & Co. "The only question is whether it will be during or after the restructuring."

US Airways shares were up 2.5 percent to $10.66 and AMR was up 2.9 percent to 46.5 cents in morning trading.

Morningstar analyst Basili Alukos said it would be in the best interests of American and US Airways to combine, a tie-up that would create a company rivaling United Continental Holdings Inc and Delta Air Lines Inc in scope.

"You would have the international operations of AMR and the lower cost structure of US Airways," Alukos said.

NBC News contributor Martha C. White, Reuters and The Associated Press contributed to this story.