DealBook: Big Investors Strengthen Opposition to Dell's Sale

12:29 p.m. | Updated

One of the country’s biggest mutual fund managers signaled its opposition to Dell‘s proposed $24.4 billion sale on Tuesday, as another investor disclosed a major step in a campaign to fight the deal.

T. Rowe Price said in a statement that it was opposed to the $13.65-a-share takeover bid being offered by the company’s founder, Michael S. Dell, and the investment firm Silver Lake. With a stake of about 4.4 percent, T. Rowe Price is Dell’s third-biggest shareholder.

The second-biggest shareholder, Southeastern Asset Management, meanwhile disclosed in a regulatory filing that it had retained D.F. King, a big proxy solicitation firm, as an adviser. It also confirmed that it held about 8.44 percent of Dell’s shares, trailing only Mr. Dell.

Proxy solicitors like D.F. King play important roles in fights over shareholder votes. They canvass a company’s investor base, providing their clients with estimates of how shareholders are leaning and strategies for winning over allies.

Southeastern has also hired Dennis J. Block of Greenberg Traurig, an experienced mergers and acquisitions lawyer, according to a person briefed on the matter.

The emergence of T. Rowe Price as an opponent of the deal is the latest sign of discontent with the management buyout bid. While Mr. Dell controls about 16 percent of the company’s stock, his offer for the computer maker requires the approval of a majority of independent shareholders.

In a statement, T. Rowe Price’s chairman and chief investment officer, Brian C. Rogers, said, “We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward.”

A spokesman for Dell repeated a statement made on Friday, saying that a special committee of the board had considered a number of strategic alternatives. “Based on that work, the board concluded that the proposed all-cash transaction is in the best interests of stockholders,” according to the statement.

Silver Lake declined to comment. 

Shares of Dell closed on Monday above the buyout price for the first time since the offer was announced last week, signaling expectations that the bid might be increased.

In a company release on Friday, Southeastern said it planned to consider all of its options to fight the deal, including a proxy fight, a lawsuit and calling on a Delaware court to determine the fair value of Dell shares.

The high price the firm paid for its holding is probably driving its opposition. Analysts have estimated that Southeastern paid more than $20 a share on average, meaning it would lose over $800 million if the current deal were completed.

A person close to the firm disputed that estimate, suggesting that Southeastern’s cost basis was closer to $16.90 a share.

Southeastern and its chief executive, O. Mason Hawkins, have been unafraid to challenge companies when their stock prices fall. The firm was a major force for change at the oil and natural gas driller Chesapeake Energy last year, eventually winning representation on its board.

With Dell, there is a long road ahead. The vote for shareholders to approve the buyout offer is at least several months away.

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Report: U.S. recovered $4.2 billion from healthcare fraud in 2012

Federal officials say they recovered nearly $8 for every dollar spent on healthcare fraud investigations in 2012. (Scott Eells / Bloomberg)

By Chad Terhune

February 11, 2013, 9:59 a.m.

Federal officials said they recovered a record-high $4.2 billion related to healthcare fraud and abuse in fiscal year 2012.

U.S. Atty. Eric Holder and Health and Human Services Secretary Kathleen Sebelius said the federal government recovered $7.90 for every dollar spent on healthcare-related fraud and abuse investigations.

The total of $4.2 billion in taxpayer dollars recovered for fiscal year 2012 was up slightly from $4.1 billion a year earlier, officials said. It's estimated that Medicare loses about $60 billion annually to fraud and improper payments.

"We are gaining the upper hand in our fight against healthcare fraud," Sebelius said.

The Obama administration has tried to crack down on Medicare fraud by boosting investigations in certain "hot spots" such as Miami and Los Angeles and using technology to detect schemes sooner.

Last year, Medicare said it began screening all 1.5-million providers enrolled in the government healthcare program to identify ineligible and potentially fraudulent providers or suppliers. As a result, officials said nearly 150,000 ineligible providers were booted from Medicare.

Still, some members of Congress have complained that the Obama administration has been too slow to deploy technology widely used by the credit-card industry to weed out fraud and abuse.

ALSO:

Former L.A. clinic owner makes Medicare's most-wanted list

Cache of Kaiser patient details was kept in family's home

Small surgeries, huge markups

Follow Chad Terhune on Twitter

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Boeing Begins Flight Testing of 787 Dreamliner to Find Battery Faults

Boeing’s ill-fated 787 has once again taken to the skies for testing in an effort to find a solution to the battery issue that has left the fleet grounded for the better part of the past month. The Federal Aviation Administration granted the company a special airworthiness certificate on Feb. 7, giving Boeing the ability to perform flights related to research and testing to solve the battery issue.

In early January the first of a series of lithium-ion batteries caught fire onboard a 787 parked on the ground in Boston. The next week a second Dreamliner battery experienced a thermal runaway during a passenger flight in Japan. Nobody was hurt in either incident, but the FAA issued an emergency airworthiness directive (.pdf) stating, “this AD requires modification of the battery system, or other actions, in accordance with a method approved by the Manager, Seattle Aircraft Certification Office (ACO), FAA.” Other agencies around the world followed suit and  the global fleet of 787s was grounded.

Boeing was allowed to make a one-time ferry flight of a Dreamliner from its Texas paint shop to the factory north of Seattle last Thursday. On Saturday the company prepared its only remaining active flight test aircraft, ZA005, at Boeing Field in Seattle for a preliminary test flight. The airplane departed Boeing Field Saturday morning and, as dictated by the FAA, flew over the sparsely populated areas in the eastern half of Washington state before finishing the two-hour, 19-minute flight over the Olympic Peninsula northwest of Seattle.

In a statement, a Boeing spokesman said the 787 had a crew of 13 on board and it was – thankfully – an uneventful flight. The two pilots and flight test engineers monitored the performance of the two lithium-ion batteries using test equipment installed specifically for the battery testing. However, Boeing has yet to share any details from the flight.

Today ZA005 was again back in the skies above eastern Washington on the second flight test. The test pilots on today’s flight were Randy Neville and Mike Bryan, the same pilots we flew with last year during a 787 preview. The airplane was the first to fly with the General Electric engines (Rolls Royce engines power the other 787s), and was being used for flight test work related to the next Dreamliner model, the slightly longer 787-9.

As flight testing begins to find a solution to the battery problem, airlines are being warned that the 787s they’ve ordered may be delayed yet again. However, production of the Dreamliner continues at both the Everett factory north of Seattle as well as the new factory in South Carolina. But without the ability to perform production flight testing of each new airplane – or simply deliver Dreamliners – the 787s are again turning the airports next to the factories into parking lots to house the massive planes.

Airlines with grounded 787 fleets are beginning to talk with Boeing about compensation for the millions of dollars being lost as their airplanes collect dust on the ground.

The National Transportation Safety Board continues its investigation into the root cause of the battery problem. The agency announced it found evidence of electrical shorts within a single cell of the 63 pound lithium-ion battery in the Boston airplane. The NTSB said it expects to issue a preliminary report in the next month, but it is up to the FAA to allow the airplane to begin flying again. No timeline has been issued, but most in the industry agree it is more likely a matter of months rather than weeks before the 787 will be carrying passengers again.

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Average movie ticket price hits record high

LOS ANGELES (TheWrap.com) – Movie-going got more expensive last year with ticket prices hitting record highs in 2012, the National Association of Theatre Owners said Monday.

The average ticket price hit $ 7.96, a three-cent bump from last year, but still the biggest annual number when not adjusted for inflation.

For the fourth quarter of 2012, 3D releases, such as “The Hobbit: An Unexpected Journey” and “Rise of the Guardians,” pushed ticket prices to $ 8.05. That was a 3.4 percent bump from the $ 7.78 cents audiences shelled out on average over the three months ending in September.

It was not, however, a record. In the second quarter of 2012, ticket prices hit unprecedented levels, averaging $ 8.12.

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Well: Price for a New Hip? Good Luck Getting a Reliable Estimate

Jaime Rosenthal, a senior at Washington University in St. Louis, called more than 100 hospitals in every state last summer, seeking prices for a hip replacement for a 62-year-old grandmother who was uninsured but had the means to pay herself.

The quotes she received might surprise even hardened health care economists: only about half of the hospitals, including top-ranked orthopedic centers and community hospitals, could provide any sort of price estimate, despite repeated calls. Those that could gave quotes that varied by a factor of more than 10, from $11,100 to $125,798.

Ms. Rosenthal’s grandmother was fictitious, created for a summer research project on health care costs. But the findings, which form the basis of a paper released on Monday by JAMA Internal Medicine, are likely to fan the debate on the unsustainable growth of American health care costs and an opaque medical system in which prices are often hidden from consumers.

“Transparency is all the rage these days in government and business, but there has been little push for pricing transparency in health care, and there’s virtually no information,” said Dr. Peter Cram, an associate professor of internal medicine at the University of Iowa, who wrote the paper with Ms. Rosenthal. He added: “I can get the price for a car, for a can of oil, for a gallon of milk. But health care? That’s not so easy.”

President Obama’s Affordable Care Act focused primarily on providing insurance to Americans who did not have it. But the high price of care remains an elephant in the room. Although many experts have said that Americans must become more discerning consumers to help rein in costs, the study illustrates how hard that can be.

“We’ve been trying to help patients get good value, but it is really hard to get price commitments from hospitals — we see this all the time,” said Jeff Rice, the chief executive of Healthcare Blue Book, a company that collects data on medical procedures, doctors visits and tests. “And even if they say $20,000, it often turns out $40,000 or 60,000.”

There are many caveats to the study. Most patients — or insurers — never pay the full sticker price of surgery, because insurance companies bargain with hospitals and doctors for discounted rates. When Ms. Rosenthal balked at initial high estimates, some hospitals produced lower rates for a person without insurance.

But in other ways the telephone quotations underestimated prices, because they did not include the fees for outpatient rehabilitation, for example.

In an accompanying commentary, Andrew Steinmetz and Ezekiel J. Emanuel of the University of Pennsylvania acknowledged that there was “no justification” for the inability to provide estimates or for the wide range of prices. But they said that more rigorous data on quality — like infection rates and unexpected deaths — were required to know when high prices were worth it.

“Without quality data to accompany price data, physicians, consumers and other health care decision makers have no idea if a lower price represents shoddy quality of if it constitutes good value,” they wrote.

But, broadly, researchers emphasized that studies had found little consistent correlation between higher prices and better quality in American health care. Dr. Cram said there was no data that “Mercedes” hip implants were better than cheaper options, for example.

Jamie Court, the president of the California-based Consumer Watchdog, said: “If one hospital can put in a hip for $12,000, then every hospital should be able to do it. When there’s 100 percent variation in sticker price, then there is no real price. It’s about profit.”

Dr. Cram said the study did contain some good news: some of the country’s top-ranked hospitals came up with “bargain basement prices” in response to repeated calls. “If you’re a good consumer and shop around, you can get a good price — you don’t have to pay $120,000 for a Honda,” he said.

But that shopping can be arduous in a market not set up to respond to consumers. To get a total price, Ms. Rosenthal often had to call the hospital to get its estimate for on-site care, and a separate quote from doctors. And many were simply perplexed when she asked for a price upfront, Ms. Rosenthal said, adding, “The people who answered didn’t know what to do with the question.”

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Ambitious makeover planned for old housing project

Denise Penegar puts a little extra effort into the teenage girls, the ones who've dropped out of high school to care for their firstborns.

Don't be afraid, the outreach worker tells them. Come down to the housing project's community center, get your GED and some job skills. Change your life.

"I was one of those girls," said Penegar, now 51 and still living in Jordan Downs, the Watts housing project where she was born.

Sometimes, she imagines how different her life might have been if someone had knocked on her door when she was 17, caring for her first baby. What would it have meant just to have "someone who is here who can help pick me up"?

Penegar is on the front lines of a bold social experiment underway at Jordan Downs, a project notorious to outsiders for its poverty, blight and violence but seen by many longtime residents, for all its problems, as a close-knit community worth preserving.

In the last year, the Housing Authority of the City of Los Angeles has begun an effort to transform Jordan that could cost more than $600 million. The plan is to turn the complex of 700 aging units into a mixed-income community of up to 1,400 apartments and condominiums, with shops and restaurants and fancy touches such as native plant gardens. The city hopes to draw in hundreds of more-affluent residents willing to pay market rate to live side by side with the city's poorest.

Spurred by changes in federal funding and policy, such "mixed use" developments have sprung up in place of infamous housing projects all over the country. But experts say Jordan is taking an approach that has not been tried on this scale.

Typically, public housing residents are moved out ahead of the bulldozers, scattered to search for new shelter. In Los Angeles, the housing authority has promised that any of the 2,300 Jordan residents "in good standing" can stay in their old units until the day they move into new ones. The project is to be built in phases, beginning with units on 21 acres of adjacent land purchased by the authority in 2008 for $31 million.

To ease the transition, the city has dispatched "community coaches" like Penegar, along with teachers, social workers, therapists — even police officers whose charge is not to make arrests but to coach youth football and triathlon teams.

In essence, officials intend to raze the buildings, not the community — and radically change its character.

It will be an enormous challenge, with success likely to be measured in tiny increments.

Only 47% of adults at Jordan reported any wages to the housing authority last year. As in many urban projects, poverty and social ills have multiplied through the generations, leaving some residents unfamiliar with opportunities and expectations beyond the neighborhood. Some rarely leave the area.

Before inviting in new neighbors with expectations of safety and comfort, the housing authority has begun flooding Jordan Downs with social services. Many of the programs are focused on women, because more than 60% of Jordan Downs' tenants live in households headed by single mothers. But men are targeted too — for job training and lessons in parenting, for instance.

By December, 10 months into the effort, more than 450 families had been surveyed by intake workers and 280 signed up for intensive services.

"Most people would say it's ambitious, but I think it's essential," said Kathryn Icenhower, executive director of Shields for Families, the South Los Angeles nonprofit that is running many of the new programs under a more than $1-million annual contract with the housing authority.

It is unknown, however, how effective the social services will be, how easy it will be to draw in wealthier residents and how many millions of dollars the federal government — a major source of funding — will provide.

Already, the housing authority has picked a development team — the for-profit Michaels Organization and the nonprofit Bridge Housing, both with respectable track records in other cities. But with financing still uncertain, it is unclear exactly how many units will be built or how much various occupants would pay.

Ultimately, a working family could pay hundreds of dollars more in rent than unemployed tenants next door for a nearly identical unit. Officials say they do not expect Watts to draw the same kind of high-income residents as the former Cabrini Green project in Chicago, which sat on prime real estate near downtown. But Jordan is in a convenient location, near the intersection of the 105 and 110 Freeways; and in a high-rent city like Los Angeles, even the steepest rates at Jordan are likely to seem a bargain.

Despite the onslaught of social services and some palpable changes — including a 53% plunge in the violent crime rate at Jordan last year — financial risks abound.

Later this spring, the authority plans to put in an application for $30 million from the federal government's Choice Neighborhoods Program as seed money. Without it, the project could be delayed.

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Wired Science Space Photo of the Day: Wings of the Seagull Nebula

This image shows the intricate structure of part of the Seagull Nebula, known more formally as IC 2177. These wisps of gas and dust are known as Sharpless 2-296 (officially Sh 2-296) and form part of the “wings” of the celestial bird. This region of the sky is a fascinating muddle of intriguing astronomical objects — a mix of dark and glowing red clouds, weaving amongst bright stars. This new view was captured by the Wide Field Imager on the MPG/ESO 2.2-metre telescope at ESO’s La Silla Observatory in Chile.

Image: ESO [high-resolution]

Caption: ESO

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All eyes on Frank Ocean as Grammy Awards kick off

LOS ANGELES (AP) — Everybody’s thinkin’ about Frank Ocean.

Ocean is a cause celebre and the man with the momentum as Sunday’s Grammy Awards kicked off with pre-telecast wins by Rihanna and Mumford & Sons. One of six top nominees with six nominations apiece, the 25-year-old R&B singer turned cultural talking point will have the music world’s attention.

It remains to be seen if it will be the “Thinkin Bout You” singer’s night, but there’s no question he’s dominated the discussion so far. Already a budding star with a gift for building buzz as well as crafting songs, Ocean was swept up by something more profound when he told fans his first love was a man last fall as he prepared to release his major-label debut, “channel ORANGE.”

It was a bold move and one that could have submarined his career before it really even got started. Instead, everyone from Beyonce to the often-homophobic R&B and rap communities showed public support. It was a remarkable moment.

“It speaks to the advancements of our culture,” renowned producer Rick Rubin said. “It feels like the culture’s moving forward and he’s a representative of the new acceptance in the world for different ideas, which just broadens (our experience), makes the world a better place.”

A recent altercation in a parking lot with Chris Brown only focused more attention on Ocean. Ocean says Brown was the aggressor; both are competing against each other in one of the Grammy categories.

Ocean is up for the major awards best new artist, album of the year and record of the year when the show airs live on CBS at 8 p.m. EST from the Staples Center, sharing top-nominee billing with fun., Dan Auerbach of The Black Keys, Mumford & Sons, Jay-Z and Kanye West.

The Grammy pre-telecast awards show got under way Sunday afternoon at the Nokia Theatre with 70 trophies up for grabs, including rock, pop, rap and country categories. Rihanna‘s “We Found Love,” featuring Calvin Harris, won the day’s first award, short form music video. Mumford & Sons took their first Grammy, winning along with Old Crow Medicine Show and Edward Sharpe and the Magnetic Zeros for their long form video documentary “Big Easy Express.”

Celebrities also began rolling down the red carpet in the early afternoon, but it remained to be seen if any would try to skirt CBS’s mandate that stars dress appropriately with butts, breasts and other sensitive areas covered adequately.

“”I think it’s just, you know, we should always stay classy and dress according to the event that’s being held,” Ashanti said on the red carpet. “So I don’t think people should be limited so much and told what you can and cannot do. But, you know, you do have to have a certain class and prestige about yourself.”

Ocean might be riding a wave toward some of the night’s biggest honors, but R&B and hip-hop performers have had a spotty history at the Grammys recently when it comes to major awards.

Only one R&B act has won album of the year this century, and it’s hard to even call him just an R&B act given his legend, artistic scope and material: Ray Charles for his “Genius & Friends,” an all-star collaboration that was honored posthumously.

Also limiting Ocean‘s chances for a clean sweep are his fellow top nominees. Fun. became just the second act to sweep nominations in all four major categories with a debut album, equaling Christopher Cross‘ 1981 feat. Like Cross’ “Sailing,” the New York-based pop-rock band has ridden along on the crest of an inescapable song: “We Are Young,” featuring Janelle Monae.

Cross won five Grammys, sweeping the major awards. Fun. likely will have a much harder time piling up that number of victories because of the buzz surrounding the group’s competitors. It’s not just Ocean who has people talking.

London-based folk-rockers Mumford & Sons had one of the top-selling albums of the year with “Babel” and already has a history with The Recording Academy’s thousands of voters, having been nominated for major awards the year prior. Also, The Black Keys have a winning track record at the Grammys.

And don’t count out West and Jay-Z, who were shut out of the major categories but remain very much in voters’ minds.

Jack White’s “Blunderbuss” competes with fun.’s “Some Nights,” Ocean‘s “channel ORANGE,” Mumford’s “Babel” and The Keys’ “El Camino” for the night’s top award, album of the year.

Gotye’s “Somebody That I Used To Know,” featuring Kimbra, Taylor Swift’s “We Are Never Ever Getting Back Together” and Kelly Clarkson’s “Stronger (What Doesn’t Kill You)” join the fun., Ocean and Black Keys entries in record of the year.

Fun. and Clarkson also are nominated for song of the year along with Ed Sheeran’s “The A Team,” Carly Rae Jepsen’s “Call Me Maybe” and Miguel’s “Adorn.”

And rounding out the major categories, fun., Ocean, Alabama Shakes, Hunter Hayes and The Lumineers are up for best new artist.

Those major nominees figure prominently on the 3 1/2-hour telecast, broadcast live on CBS.

Swift will kick things off with a show-opening performance. Fun. and Ocean will take the stage. Others scheduled to perform include Justin Timberlake, Carrie Underwood, Clarkson, White and Juanes.

There will be no shortage of mashups the Grammys have become famous for, either. Elton John, Mavis Staples, Mumford, Brittany Howard, T Bone Burnett and Zac Brown are saluting the late Levon Helm, who won the Americana Grammy last year a few months before his death. The Keys will join Dr. John and the Preservation Hall Jazz Band on stage. Sting, Rihanna and Bruno Mars will perform together. Other team-ups include Miranda Lambert and Dierks Bentley, and Alicia Keys and Maroon 5.

___

AP writer Nekesa Mumbi Moody in Los Angeles contributed to this report.

___

Online:

http://grammy.com

___

Follow AP Music Writer Chris Talbott: http://twitter.com/Chris_Talbott.

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For Families Struggling with Mental Illness, Carolyn Wolf Is a Guide in the Darkness

When a life starts to unravel, where do you turn for help?

Melissa Klump began to slip in the eighth grade. She couldn’t focus in class, and in a moment of despair she swallowed 60 ibuprofen tablets. She was smart, pretty and ill: depression, attention deficit disorder, obsessive-compulsive disorder, either bipolar disorder or borderline personality disorder.

In her 20s, after a more serious suicide attempt, her parents sent her to a residential psychiatric treatment center, and from there to another. It was the treatment of last resort. When she was discharged from the second center last August after slapping another resident, her mother, Elisa Klump, was beside herself.

“I was banging my head against the wall,” the mother said. “What do I do next?” She frantically called support groups, therapy programs, suicide prevention lines, anybody, running down a list of names in a directory of mental health resources. “Finally,” she said, “somebody told me, ‘The person you need to talk to is Carolyn Wolf.’ ”

That call, she said, changed her life and her daughter’s. “Carolyn has given me hope,” she said. “I didn’t know there were people like her out there.”

Carolyn Reinach Wolf is not a psychiatrist or a mental health professional, but a lawyer who has carved out what she says is a unique niche, working with families like the Klumps.

One in 17 American adults suffers from a severe mental illness, and the systems into which they are plunged — hospitals, insurance companies, courts, social services — can be fragmented and overwhelming for families to manage. The recent shootings in Newtown, Conn., and Aurora, Colo., have brought attention to the need for intervention to prevent such extreme acts of violence, which are rare. But for the great majority of families watching their loved ones suffer, and often suffering themselves, the struggle can be boundless, with little guidance along the way.

“If you Google ‘mental health lawyer,’ ” said Ms. Wolf, a partner with Abrams & Fensterman, “I’m kinda the only game in town.”

On a recent afternoon, she described in her Midtown office the range of her practice.

“We have been known to pull people out of crack dens,” she said. “I have chased people around hotels all over the city with the N.Y.P.D. and my team to get them to a hospital. I had a case years ago where the person was on his way back from Europe, and the family was very concerned that he was symptomatic. I had security people meet him at J.F.K.”

Many lawyers work with mentally ill people or their families, but Ron Honberg, the national director of policy and legal affairs for the National Alliance on Mental Illness, said he did not know of another lawyer who did what Ms. Wolf does: providing families with a team of psychiatrists, social workers, case managers, life coaches, security guards and others, and then coordinating their services. It can be a lifeline — for people who can afford it, Mr. Honberg said. “Otherwise, families have to do this on their own,” he said. “It’s a 24-hour, 7-day-a-week job, and for some families it never ends.”

Many of Ms. Wolf’s clients declined to be interviewed for this article, but the few who spoke offered an unusual window on the arcane twists and turns of the mental health care system, even for families with money. Their stories illustrate how fraught and sometimes blind such a journey can be.

One rainy morning last month, Lance Sheena, 29, sat with his mother in the spacious family room of her Long Island home. Mr. Sheena was puffy-eyed and sporadically inattentive; the previous night, at the group home where he has been living since late last summer, another resident had been screaming incoherently and was taken away by the police. His mother, Susan Sheena, eased delicately into the family story.

“I don’t talk to a lot of people because they don’t get it,” Ms. Sheena said. “They mean well, but they don’t get it unless they’ve been through a similar experience. And anytime something comes up, like the shooting in Newtown, right away it goes to the mentally ill. And you think, maybe we shouldn’t be so public about this, because people are going to be afraid of us and Lance. It’s a big concern.”

Her son cut her off. “Are you comparing me to the guy that shot those people?”

“No, I’m saying that anytime there’s a shooting, like in Aurora, that’s when these things come out in the news.”

“Did you really just compare me to that guy?”

“No, I didn’t compare you.”

“Then what did you say?”

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American and US Airways Are Expected to Announce Merger This Week

After months of negotiations, American Airlines and US Airways are expected this week to announce a merger, which would create the nation’s biggest airline and concentrate even further a once-fragmented industry.

A merger would expand American’s domestic network, particularly in the Northeast and the Southwest, and create a more formidable competitor internationally. The combined airline would jump ahead of United Airlines and Delta Air Lines, both of which have grown through mergers of their own in recent years.

The combination would probably bring to an end the wave of consolidation that has swept the industry. Since 2001 there have been five large mergers, reducing the number of airlines to three main carriers, along with a handful of low-cost carriers like Southwest Airlines and JetBlue, and regional carriers.

These mergers have led to cuts in service to many smaller cities around the country. But they have also created healthier and more profitable airlines that are able to invest in new planes and products. Faced with rising fuel costs, and losing tens of billions of dollars in the last decade, airline executives argued that the only way to survive was to consolidate capacity.

American, which has been in bankruptcy protection since November 2011, is currently the nation’s third-largest airline with domestic and international flights; US Airways is the fourth.

The boards of both carriers are expected to meet on Monday to approve the combination, which then needs to be approved by a bankruptcy judge in New York. A tie-up also requires the approval of federal regulators and antitrust authorities. But analysts expect regulators to approve the deal since there is little overlap between the two networks and no hubs in the same cities.

Even if the deal clears all these hurdles, the merged airline still faces a range of challenges. Airline mergers are often rocky — involving complex technological systems, big reservation networks as well as large labor groups with different corporate cultures that all need to be combined seamlessly. United angered passengers last year after a series of merger-related computer and reservation mistakes, and late and delayed flights.

A deal would be a major victory for Doug Parker, the chairman of US Airways, who began pursuing a merger with the bigger carrier soon after American filed for bankruptcy. His argument — that American could succeed against bigger airlines only if it combined networks with US Airways — swayed American’s creditors who have a critical say in the company’s future.

The carriers have been discussing a deal for months. In recent days, both sides have moved much closer but were still trying to figure out how much the merged carrier would be worth and how management positions would be split.

Tom Horton, American’s chairman, who was opposed to a merger for much of the last year, was offered a position as nonexecutive chairman, said a person familiar with the matter but who asked not to be identified because the talks were still under way. US Airways shareholders could end up with about 28 percent of the new airline, and American’s creditors would have 72, this person said.

A merger could be structured to take effect as American exits bankruptcy. The airlines are pushing for a deal before Feb. 15, when some nondisclosure agreements with American bondholders are set to expire.

The new airline will be called American Airlines and based in Dallas. It will have a combined 94,000 employees, 950 planes, 6,500 daily flights, nine major hubs, and total sales of nearly $39 billion. It would be the market leader on the East Coast, the Southwest and South America. But it would remain a smaller player in the Pacific and Europe, where United and Delta are stronger.

Mr. Parker deftly outmaneuvered Mr. Horton by lobbying American’s employees. He gained an important edge last April when he won the public support of American’s three main labor groups. More recently, pilots from both airlines agreed on how they would work together if the merger succeeded.

The success of these labor discussions, even before the merger was formally discussed, helped persuade American’s creditors to follow Mr. Parker’s strategy.

Mr. Horton, and American’s management team, had argued that they should complete the carrier’s reorganization and emerge from bankruptcy as an independent airline before considering any mergers.

But under pressure from Mr. Parker, the management of American Airlines was eventually forced by its creditors to talk to Mr. Parker about a merger. All that was left then was to figure out who was going to lead the merged airline and how much it would be worth.

Mr. Parker, more than anyone in the business, knows the difficulty of integrating two airlines. In 2005, he orchestrated the merger of the airline he was then running, America West, with a larger carrier, US Airways. But pilots from each of these two original airline have yet to agree to a common contract and seniority rules, and, to this day, cannot fly together.

The difficulty is likely to be compounded at American. In bankruptcy, American cut thousands of jobs, reduced benefits, froze pensions, and sought higher productivity rules from its employees.

Before the US Airways-American deal, the last major combination was the acquisition of AirTran by Southwest, completed in 2011. That followed the merger of United and Continental Airlines in 2010, which created the current leader, and before that Delta with Northwest.

American has major hubs in Dallas, Miami, Chicago, Los Angeles and New York. But it has been steadily losing ground to its rivals over the last decade while racking up losses that have totaled more than $12 billion in over 10 years.

US Airways has hubs in Phoenix, Philadelphia and Charlotte, and has a big presence at Washington’s National Airport.

Its shareholders will have to vote on the proposed merger.

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