Rising riches: 1 in 5 in US reaches affluence

WASHINGTON — Fully 20 percent of U.S. adults become rich for parts of their lives, wielding extensive influence over America's economy and politics, according to new survey data.

These "new rich," made up largely of older professionals, working married couples and more educated singles, are becoming politically influential, and economists say their capacity to spend is key to the U.S. economic recovery. But their rise is also a sign of the nation's continuing economic polarization.

They extend well beyond the wealthiest 1 percent, a traditional group of super-rich millionaires and billionaires with long-held family assets. The new rich have household income of $250,000 or more at some point during their working lives, putting them — if sometimes temporarily — in the top 2 percent of earners.

The new survey data on the affluent are being published in an upcoming book, and an analysis by The AP-NORC Center for Public Affairs Research provided additional information on the views of the group.

In a country where poverty is at a record high, today's new rich are notable for their sense of economic fragility. They rely on income from their work to maintain their social position and pay for things such as private tutoring for their children. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.

Last week, President Barack Obama asserted that growing inequality is "the defining challenge of our time," signaling that it will be a major theme for Democrats in next year's elections.

"In this country, you don't get anywhere without working hard," said James Lott, 28, a pharmacist in Renton, Wash., who adds to his six-figure salary by day-trading stocks. The son of Nigerian immigrants, Lott says he was able to get ahead by earning an advanced pharmacy degree. He makes nearly $200,000 a year.

After growing up on food stamps, Lott now splurges occasionally on nicer restaurants, Hugo Boss shoes and extended vacations to New Orleans, Atlanta and parts of Latin America. He believes government should play a role in helping the disadvantaged. But he says the poor should be encouraged to support themselves, explaining that his single mother rose out of hardship by starting a day-care business in their home.

The new research suggests that affluent Americans are more numerous than government data depict, encompassing 21 percent of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

Even outside periods of unusual wealth, members of this group generally hover in the $100,000-plus income range, keeping them in the top 20 percent of earners.

At the same time, an increasing polarization of low-wage work and high-skill jobs has left middle-income careers depleted.

"For many in this group, the American dream is not dead. They have reached affluence for parts of their lives and see it as very attainable, even if the dream has become more elusive for everyone else," says Mark Rank, a professor at Washington University in St. Louis, who calculated numbers on the affluent for a forthcoming book, "Chasing the American Dream," to be published by the Oxford University Press.

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children.

Because their rising status comes at a time when upward mobility in the U.S. ranks lowest among wealthy industrialized counties, the spending attitudes of the new rich have implications for politics and policy. It's now become even harder for people at the bottom to move up.

The group is more liberal than lower-income groups on issues such as abortion and gay marriage, according to an analysis of General Social Survey data by the AP-NORC Center for Public Affairs Research. But when it comes to money, their views aren't so open. They're wary of any government role in closing the income gap.

In Gallup polling in October, 60 percent of people making $90,000 or more said average Americans already had "plenty of opportunity" to get ahead. Among those making less than $48,000, the share was 48 percent

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Sometimes referred to by marketers as the "mass affluent," the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

While paychecks shrank for most Americans after the 2007-2009 recession, theirs held steady or edged higher. In 2012, the top 20 percent of U.S. households took home a record 51 percent of the nation's income. The median income of this group is more than $150,000.

Once concentrated in the old-money enclaves of the Northeast, the new rich are now spread across the U.S., mostly in bigger cities and their suburbs. They include Washington, D.C.; Boston, Los Angeles, New York, San Francisco and Seattle. By race, whites are three times more likely to reach affluence than nonwhites.

Paul F. Nunes, managing director at Accenture's Institute for High Performance and Research, calls this group "the new power brokers of consumption." Because they spend just 60 percent of their before-tax income, often setting the rest aside for retirement or investing, he says their capacity to spend more will be important to a U.S. economic recovery.

In Miami, developers are betting on a growing luxury market, building higher-end malls featuring Cartier, Armani and Louis Vuitton and hoping to expand on South Florida's Bal Harbour, a favored hideaway of the rich.

"It's not that I don't have money. It's more like I don't have time," said Deborah Sponder, 57, walking her dog Ava recently along Miami's blossoming Design District. She was headed to one of her two art galleries — this one between the Emilio Pucci and Cartier stores and close to the Louis Vuitton and Hermes storefronts.

But Sponder says she doesn't consider her income of $250,000 as upper class, noting that she is paying college tuition for her three children. "Between rent, schooling and everything — it comes in and goes out."

The new rich's influence will only grow as middle-class families below them struggle. The Federal Reserve said Monday that the nation's wealth rose 2.6 percent from July through September to $77.3 trillion, a record high, boosted in part by a surging stock market. But the gains haven't been equally distributed; the wealthiest 10 percent of U.S. households own about 80 percent of stocks.

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Both Democrats and Republicans are awakening to the political realities presented by this new demographic bubble.

Traditionally Republican, the group makes up more than 1 in 4 voters and is now more politically divided, better educated and less white and male than in the past, according to Election Day exit polls dating to the 1970s.

Sixty-nine percent of upper-income voters backed Republican Ronald Reagan and his supply-side economics of tax cuts in 1984. By 2008, Democrat Barack Obama had split their vote evenly, 49-49.

In 2012, Obama lost the group, with 54 percent backing Republican Mitt Romney.

"For the Democrats' part, traditional economic populism is poorly suited for affluent professionals," says Alan Abramowitz, an Emory University professor who specializes in political polarization.

The new rich includes Robert Kane, 39, of Colorado Springs, Colo.

A former stockbroker who once owned three houses and voted steadfastly Republican, Kane says he was humbled after the 2008 financial meltdown, which he says exposed Wall Street's excesses. Now a senior vice president for a private equity firm specializing in the marijuana business, Kane says he's concerned about upward mobility for the poor and calls wealthy politicians such as Romney "out of touch."

But Kane, now a registered independent, draws the line when it comes to higher taxes. "A dollar is best in your hand rather than the government's," he says.

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Associated Press Director of Polling Jennifer Agiesta, News Survey Specialist Dennis Junius, and writers Suzette Laboy in Miami and Kristen Wyatt in Denver contributed to this report.

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Big tech companies lash out at government snooping

WASHINGTON — Silicon Valley is escalating pressure on President Barack Obama to curb the U.S. government surveillance programs that vacuum personal information off the Internet and threaten the technology industry's financial livelihood.

A coalition that includes Google, Apple, Yahoo, Facebook and Microsoft lashed out in an open letter printed Monday in major newspapers and a new website, http://reformgovernmentsurveillance.com .

The crusade united eight companies that often compete fiercely against each other, but now find themselves banding together to limit the potential damage from revelations about the National Security Agency's snooping on Web surfers.

Twitter Inc., LinkedIn Corp. and AOL Inc. joined Google Inc., Apple Inc., Yahoo Inc., Facebook Inc. and Microsoft Corp. in the push for tighter controls over electronic espionage. The group is immersed in the lives of just about everyone who uses the Internet or a computing device.

As the companies' services and products have become more deeply ingrained in society, they have become integral cogs in the economy. Their prosperity also provides them with the cash to pay for lobbyists and fund campaign contributions that sway public policy.

Monday's public relations offensive is a by-product of documents leaked over the past six months by former NSA contractor Edward Snowden. The records reveal that the NSA has been obtaining emails and other personal data from major tech companies under secret court orders for the past five years and scooping up other data through unauthorized hacking into data centers.

Silicon Valley has been fighting back in the courts and in Congress as they seek reforms that would allow them to disclose more information about secret court orders. Several of the companies are also introducing more encryption technology to shield their users' data from government spies and other prying eyes.

Monday's letter and the new anti-snooping website represent the technology industry's latest salvo in an attempt to counter any perception that they voluntarily give the government access to users' email and other sensitive information.

Although the campaign is ostensibly directed at governments around the world, the U.S. is clearly the main target.

"The balance in many countries has tipped too far in favor of the state and away from the rights of the individual — rights that are enshrined in our Constitution," the letter said. "This undermines the freedoms we all cherish. It's time for a change."

Civil liberties aren't the only thing at stake. One of the reasons the technology companies have become a rich vein for crime-fighting authorities is that they routinely store vast amounts of personal data as part of their efforts to tailor services and target advertising.

By analyzing search requests, Web-surfing habits, social networking posts and even the content of emails, the companies are able to determine, for instance, the type of digital ads to show individual users. The NSA revelations have raised fears that people might shy away from some Internet services or share less information about themselves. Such a shift would make it more difficult for companies to increase their ad revenue and, ultimately, boost their stock prices.

In a statement, Yahoo CEO Marissa Mayer said the NSA disclosures had "shaken the trust of our users."

Google CEO Larry Page and Facebook CEO Mark Zuckerberg, two of the richest people in the world, also chimed with statements urging the U.S. to adopt reforms to protect personal information.

U.S. intelligence officials have staunchly defended the electronic espionage, contending the NSA's tactics have helped disrupt terror attacks. Officials also insist that the agency takes care not to look at the content of conversations or messages by U.S. citizens.

Obama has asked a panel of hand-picked advisers to report on the spying issue this month and recently said he'll propose the NSA use "some self-restraint" in handling data.

White House spokeswoman Caitlin Hayden indicated the administration expects to address many of the concerns raised in Monday's letter after Obama's advisers complete their review. "As we have said repeatedly, we are committed to conducting intelligence activities with appropriate constraints, oversight, transparency and accountability," she said.

Monday's letter goes farther than the companies' previous statements in favor of overhauling surveillance practices, according to Kevin Bankston, policy director of the New America Foundation's Open Technology Institute. He notes that the new principles put forward by the companies include "an unambiguous condemnation" of bulk data collection as conducted by the NSA.

It was a shrewd move for the companies to disseminate the open letter through newspaper ads, said Daniel Castro, a senior analyst for the Information Technology and Innovation Foundation, a Washington, D.C. think tank.

By virtue of connecting directly with a massive proportion of the U.S. population, the companies "have a huge reach," Castro said. "They want people to be supporting and rallying around this effort."

The Silicon Valley companies also are waging an attack in the Foreign Intelligence Surveillance Court, where they are fighting to be allowed to reveal more details about how frequently the NSA has been seeking user data. U.S. law currently prevents the recipients of national security orders from breaking down the number of demands they get under the Patriot Act. The companies contend that restriction fuels the erroneous perception that the government has a direct pipeline to their users' data.

The government countered with a motion on Friday arguing that it should be able to redact, or withhold from publication, parts of its justifications to the courts for barring such detailed reporting by the companies.

Technology companies are also concerned that governments outside the U.S., such as the European Union, might set tougher rules for businesses to protect the privacy of their citizens, according to Joss Wright, a research fellow of the Oxford Internet Institute.

"It's potentially huge," Wright said. "Other countries around the world could make it harder for (the companies) to carry on with unrestricted data gluttony."

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Liedtke reported from San Francisco. Associated Press Writers Danica Kirka and Raphael Satter contributed to this story from London.

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Online:

http://ReformGovernmentSurveillance.com

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Mass. gambling chair says he disclosed conflict

BOSTON — State gambling commission chairman Stephen Crosby says he made all the necessary disclosures after learning that a friend and former business partner was the co-owner of land in Everett where a casino has been proposed.

Crosby announced last week that he planned to recuse himself from a review of the land deal between Wynn Resorts and the owners of the former Monsanto chemical site. Crosby says he has known the site's co-owner, Paul Lohnes, since the 1970s, but has not spoken with him for nearly two years.

Crosby told reporters Monday that he disclosed the potential conflict to Gov. Deval Patrick and in two filings with the state Ethics Commission.

Crosby reiterated that he expected to be a full participant any in future licensing decisions about Wynn, saying he was confident of his ability to be objective.

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Mass. pension board settles suit over mine blast

BOSTON — Massachusetts has reached a $265 million settlement with a mining company over allegations that it misrepresented its safety record in an effort to artificially inflate its stock price after a deadly 2010 explosion at a West Virginia mine, state officials announced Monday.

The Pension Reserves Investment Management Board, which oversees public pension investments in Massachusetts, was the lead plaintiff in a class-action lawsuit brought by multiple investors against Alpha Appalachia Holdings Inc., formerly known as Massey Energy Co. Its parent company, Alpha Natural Resources, bought Massey for $7.1 billion in 2011.

"Businesses need to be open and transparent to the people who invest in them, and this case sends a clear message that misrepresentations and bad business practices will not be tolerated and will have severe consequences," said Massachusetts Treasurer Steven Grossman, also chairman of the investment board.

Investors' share of the settlement will be proportional to their percentage of shares damaged in value as a result of the misstatements by Massey, officials said.

"This settlement returns significant taxpayer money to the state pension system that was lost as a result of misleading information," state Attorney General Martha Coakley said. "Businesses must be truthful and honest with investors and our office will continue working to ensure we protect these important public funds."

Ted Pile, a spokesman for Bristol, Va.-based Alpha, said the settlement is related to allegations from before Alpha bought Massey. Alpha could have gone to court, he said, but decided the prudent thing to do was to resolve it quickly and put it behind the company.

The plaintiffs alleged that Massey told investors it strongly adhered to proper safety procedures, but the company had a culture of safety violations, leading to the April 2010 explosion at the Upper Big Branch coal mine in West Virginia, which killed 29 people in the worst U.S. coal mining disaster in 40 years. Investigators uncovered hundreds of safety violations, causing the company's stock to plunge.

Multiple investigations found the blast was sparked by worn and broken equipment, fueled by accumulations of methane gas and coal dust, and allowed to spread because of clogged and broken water sprayers.

Investigators also found "systematic, intentional and aggressive efforts" to hide problems and throw off inspectors, including the falsification of safety records, the federal Mine Safety and Health Administration said.

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Former Napster exec killed on bike by patrol car

CALABASAS, Calif. — A former chief operating officer of the online file-sharing service Napster was killed when he was struck by a sheriff's patrol car while riding a bicycle, authorities said Monday.

Lawyer and music industry veteran Milton Everett Olin Jr. of Woodland Hills died Sunday, according to coroner's Lt. Joe Bale.

The Los Angeles County Sheriff's Department said Olin and the patrol car were traveling in the same direction on Mulholland Highway in suburban Calabasas when the collision occurred.

The cyclist was in the bicycle lane when he was struck, KCAL-TV reported, citing investigators. He landed on the windshield, shattering the glass before rolling off the cruiser to the street.

The deputy, who was not named, was taken to a hospital for treatment of cuts and bruises.

The cause of the crash was under investigation.

In addition to once serving as a top executive for Napster, the 65-year-old Olin was a prominent entertainment attorney for Altschul & Olin LLP, which he co-founded, the Los Angeles Times (http://lat.ms/18iDA4i ) reported.

Prior to Napster, Olin worked for A&M Records as vice president of business development and was responsible for signing artists and acquiring music rights.

Napster was a pioneer in online music sharing, leading to lawsuits by Metallica and other acts in 2000. The suits eventually forced a settlement that required Napster to evolve into a pay-for-use service that became something of a model for today's streaming companies.

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Report: NSA spying on virtual worlds, online games

LONDON — American and British intelligence operations have been spying on gamers across the world, media outlets reported, saying that the world's most powerful espionage agencies sent undercover agents into virtual universes to monitor activity in online fantasy games such as "World of Warcraft."

Stories carried Monday by The New York Times, the Guardian, and ProPublica said U.S. and U.K. spies have spent years trawling online games for terrorists or informants. The stories, based on documents leaked by former National Security Agency contractor Edward Snowden, offer an unusual take on America's world-spanning surveillance campaign, suggesting that even the fantasy worlds popular with children, teens, and escapists of all ages aren't beyond the attention of the NSA and its British counterpart, GCHQ.

Virtual universes like "World of Warcraft" can be massively popular, drawing in millions of players who log months' worth of real-world time competing with other players for online glory, virtual treasure, and magical loot. At its height, "World of Warcraft" boasted some 12 million paying subscribers, more than the population of Greece. Other virtual worlds, like Linden Labs' "Second Life" or the various games hosted by Microsoft's Xbox — home to the popular science fiction-themed shoot-em-up "Halo" — host millions more.

Spy agencies have long worried that such games serve as a good cover for terrorists or other evildoers who could use in-game messaging systems to swap information. In one of the documents cited Monday by media outlets, the NSA warned that the games could give intelligence targets a place to "hide in plain sight."

Linden Labs and Microsoft Inc. did not immediately return messages seeking comment. In a statement, Blizzard Entertainment said that it is "unaware of any surveillance taking place. If it was, it would have been done without our knowledge or permission."

Microsoft issued a similar statement, saying it is "not aware of any surveillance activity. If it has occurred as reported, it certainly wasn't done with our consent."

The 82-page-document, published on The New York Times' website, also noted that opponents could use video games to recruit other users or carry out virtual weapons training — pointing to the Sept. 11, 2001, hijackers as examples of terrorists who had used flight simulation software to hone their skills.

Important details — such as how the agencies secured access to gamers' data, how many players' information was compromised, or whether Americans were swept up in the spying — were not clear, the Times and ProPublica said, but the reports point to a determined effort to infiltrate a world many people associate with adolescents and shut-ins.

At the request of GCHQ, the NSA began extracting "World of Warcraft" data from its global intelligence haul, trying to tie specific accounts and characters to Islamic extremism and arms dealing efforts, the Guardian reported. Intelligence on the fantasy world could eventually translate to real-world espionage success, one of the documents suggested, noting that "World of Warcraft" subscribers included "telecom engineers, embassy drivers, scientists, the military and other intelligence agencies."

"World of Warcraft" wasn't the only target. Another memo noted that GCHQ had "successfully been able to get the discussions between different game players on Xbox Live." Meanwhile, so many U.S. spies were roaming around "Second Life" that a special "deconfliction" unit was set up to prevent them from stepping on each other's toes.

Blizzard Entertainment is part of Santa Monica, Calif.-based Activision Blizzard Inc.

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AP Technology Writer Barbara Ortutay in New York contributed to this report.

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Sysco to buy US Foods for about $3.5B

HOUSTON — One of the largest food supply companies is buying one of its key rivals, creating an even larger, global distribution company.

Sysco is buying privately held US Foods for about $3.5 billion in cash and stock. When the deal closes, Sysco expects the addition of US Foods to boost its annual sales by about 46 percent to around $65 billion.

Sysco shares rose almost 10 percent Monday and hit their highest point in decades.

Houston's Sysco will pay $3 billion in common stock and $500 million in cash. It will also assume or refinance about $4.7 billion in debt. That puts the total value of the deal at about $8.2 billion.

Sysco President and CEO Bill DeLaney said that the two companies have highly complementary core strengths including large product portfolios.

For the fiscal year that ended in June, Sysco's sales totaled $44.41 billion. It trucks food and cooking supplies to about 425,000 customers through 193 locations in the U.S., Bahamas, Canada, Ireland and Northern Ireland.

US Foods' customers include independent and chain restaurants, health care and hospitality companies, and government and educational institutions. Major stakeholders in the company, based just outside of Chicago, in Rosemont, Ill., include Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. LP.

Representatives from both of those investment firms will join Sysco's board.

When the deal closes, US Foods shareholders will own about 87 million shares, or about 13 percent, of Sysco's common stock.

The buyout has been approved by the boards of both companies. Sysco said it expects the deal, which is set to close in the third calendar quarter of 2014, to immediately boost its profit after adjusting for acquisition-related costs and expenses. It's also expected to create annual cost savings of at least $600 million after three or four years.

Moody's Investors Service placed all of Sysco's ratings, including its investment-grade "A1" long-term rating, under review for possible downgrade. Moody's said that while the deal makes sense and the price seems fair, a downgrade is likely given the amount of debt Sysco will assume.

Sysco shares rose $3.31, or 9.7 percent, to close at $37.62. The stock peaked earlier Monday at $43.40, its highest point since at least 1985. It's up 19 percent this year.

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McDonald's: Key US sales figure slipped in Nov.

OAK BROOK, Ill. — McDonald's said Monday that a key sales figure slipped 0.8 percent in the U.S. last month, as the world's biggest hamburger chain faced tough competition and flat traffic.

Sales at stores open at least a year is a key gauge of health because it excludes results from stores recently opened or closed. Shares slipped 1.1 percent Monday.

Globally, the sales figure rose 0.5 percent in November, the same as in October. The increase was the result of a 1.9 percent increase in Europe, led by U.K., France and Russia. This was somewhat offset by weakness in Germany.

It declined 2.3 percent in the region including Asia, the Pacific, the Middle East and Africa mostly because of softness in Japan.

McDonald's is dealing with intensifying competition and changing eating habits. People are increasingly reaching for foods they feel are fresh, healthy or higher quality, with chains such as Chipotle enjoying relatively stronger growth. To keep pace, McDonald's has introduced options such as chicken wraps and breakfast sandwiches with egg whites. But the company remains a target for health critics, and changing public perceptions about its food won't be easy.

In the meantime, McDonald's is also trying to win over diners with cheaper fare. But its focus on its famous Dollar Menu has been a sore point with franchisees, who are seeing their profit margins hurt as costs for ingredients climb. As such, McDonald's recently revamped the menu as the "Dollar Menu & More," with a range of items costing up to $5. It is not clear yet how the strategy will go over with customers.

The company said Monday that breakfast items, chicken options and the expanded value menu did well in the U.S.

McDonald's, which has more than 34,000 locations around the world, said the figure includes sales at all restaurants open at least 13 months, including those temporarily closed.

Shares of the Oak Brook, Ill., company fell $1.08 to close at $95.72 Monday. They're up 8.5 percent this year.

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Oil falls slightly; natural gas soars on weather

NEW YORK — The price of oil fell slightly Monday, the first decline in seven trading sessions.

Benchmark U.S. crude for January delivery slipped 31 cents to $97.34 a barrel on the New York Mercantile Exchange. Oil had gained $5.35 a barrel, or 5.8 percent, over the previous six trading days.

Meanwhile, natural gas rose above $4.20 for the first time since May 28, on the likelihood that homeowners turned up the heat to try to shake off the effects of two wintry storms that plowed across the country. Forecasts are for colder than normal temperatures in the Midwest this week.

Natural gas futures rose 12 cents, or 2.9 percent, to $4.23 per $1,000 cubic feet.

U.S. drivers who braved the rough conditions in many areas paid an average of $3.26 a gallon for gasoline. That's down 9 cents from this time a year ago.

Brent crude, a benchmark for international oils, dropped $2.22 at $109.39 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline lost 5 cents to $2.67 a gallon.

— Heating oil lost 4 cents to $3.01 a gallon.

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New American Airlines emerges as deal closes

FORT WORTH, Texas — American Airlines emerged from bankruptcy protection and US Airways culminated its long pursuit of a merger partner as the two completed their deal Monday to create the world's biggest airline.

It's the latest in a series of mergers that will leave four airlines controlling more than 80 percent of the U.S. air-travel market. With less competition, the airlines have successfully limited the number of seats, boosting prices and returning to profitability.

American's old parent, AMR Corp., is gone, replaced by the new American Airlines Group Inc. CEO Doug Parker remotely rang the opening bell of the Nasdaq Stock Market, flanked on stage by executives and labor leaders of both airlines and in front of a crowd of cheering employees.

"Our goal here is to go and restore American Airlines to its position as the greatest airline in the world," Parker said. The largest airline as recently as 2008, American struggled through a decade of huge losses and fell behind United and Delta in size.

For passengers, the merger won't mean many immediate changes. Whether the deal leads to higher ticket prices, the issue at the heart of legal challenges from the government and consumer groups, remains to be seen.

Parker said that merger won't lead to higher airfares because the new American plans to keep all the service currently offered by American and US Airways.

"Airline prices are like prices in other businesses — they track with supply and demand, and we're not reducing any of the supply," he said in an interview with The Associated Press.

Elite members of the two frequent-flier programs will get reciprocal benefits in early January, with other changes being phased in, executives said. The airlines expect to soon be able to book passengers on each other's flights, increasing the destinations available to customers of both.

It will take about two years to combine American's fleet and workforce with those of US Airways, Parker said. US Airways will join Continental, Northwest and other airlines that now exist only in the memories of employees and longtime travelers.

Airline mergers are notoriously troublesome. United has been plagued by computer-network problems since combining with Continental, leading to outages and flight delays. Airlines' technology systems handle everything from passenger information to weight and balance calculations on every flight. Then there is the difficulty in merging two sets of employees who, in this case, are represented by different unions.

Already the two flight-attendant unions are fighting with each other — reminiscent of the continuing, eight-year battle between pilots for US Airways and America West. The union that represents mechanics at US Airways boycotted Monday's event because their contract talks have been stalled for nearly three years.

Unions at American received Parker like a conquering hero. Their support for a merger led by US Airways executives was a turning point when AMR CEO Tom Horton still hoped to keep his airline independent. For their efforts, the unions won stock in the new company.

Horton, who will serve briefly as chairman before departing, will get severance of about $17 million in cash and stock, the new company said in a regulatory filing Monday. The merger agreement called for a $20 million severance payment, but a judge wouldn't allow AMR to pay it while in bankruptcy.

Longtime American CEO Robert Crandall flew in from Florida for the occasion and predicted that Parker would "recreate a great airline." Crandall said American fell from grace by waiting too long to file for bankruptcy and because his successor angered workers in 2003 with a secret deal on executive bonuses while regular workers were taking pay and benefit cuts.

On Monday, Parker made symbolic moves to extend a hand to labor — painting over parking spaces once reserved for executives, and asking Nasdaq to inscribe a commemorative opening bell to the employees instead of to him. Still, the honeymoon could be a short one.

"His greatest challenge is keeping positive sentiment on his side," said Vicki Bryan, an analyst with bond-research firm Gimme Credit. "He's at the peak of 'happy' right now. He's got to keep the unions happy; he's got to keep the computers running; he's got to keep the balloon in the air."

Both American and US Airways have rated poorly in surveys of airline service, a theme sounded by some passengers interviewed at DFW Airport.

"American could use improvement on courtesy, service and condition of their aircraft — they have some really old planes," said one flier, Frankie Marrow, a singer from Los Angeles. She wasn't sure that US Airways is the partner to help American get better on those scores either, adding, "I've never been impressed with US Airways."

In their first day of trading, shares of American Airlines Group rose 65 cents, or 2.7 percent, to close at $24.60.

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Follow David Koenig at http://www.twitter.com/airlinewriter

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