American Airlines and US Airways to merge?

[OhioGuy]

American unions support possible US Air merger

By Aaron Smith @CNNMoney
April 20, 2012: 11:09 AM ET

Workers for three American Airlines unions have agreed to support a potential merger with US Airways Group, according to a US Air document filed with the Securities and Exchange Commission on Friday.

The unions - the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union - represent 55,000 employees, US Airways said in the filing.

But the airline also pointed out that a deal has not gone through yet.

"Today's news does not mean we have agreed to merge with American Airlines," wrote US Airways (LCC, Fortune 500) Chief Executive Douglas Parker in a letter to his employees. "It only means we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality."

[OhioGuy]

Not sure how I feel about this. The loss of another airline could have negative impacts for consumers on ticket prices. When the US cell phone industry was on the verge of being reduced from the big four to the big three due to the attempted merger of AT&T and T-Mobile, the US government stepped in and ultimately the plans fell apart. Now we're at a point where the big four airlines could be reduced to three. Granted there are other carriers out there, such as Southwest, Jet Blue, Frontier, and Alaska, but they don't quite have the same reach as the main legacy carriers (similar to US Cellular, Cricket, TracFone, etc).

If this went through, I would assume the airline would be called American Airlines rather than US Airways. Would the headquarters remain in Dallas? Or be located in Phoenix? And as far as hubs are concerned, American already has JFK. Will they need the US Airways hub at PHL to remain as big as it is today? What about CLT and sub-hub DCA? I would assume there wouldn't be significant changes for the American hubs at ORD and DFW. The US Airways hub at PHX is probably fine as well, though having a major hub to the east in Dallas and another major hub to the west in LA could have some ramifications for PHX.

[bunt_q]

I guess they'd have to leave Star Alliance. Boo. US Airways is BY FAR my least favorite airline to fly. Still, I like to have as many miles-earning options as possible.

[OhioGuy]

Originally Posted by bunt_q

I guess they'd have to leave Star Alliance. Boo. US Airways is BY FAR my least favorite airline to fly. Still, I like to have as many miles-earning options as possible.

Same for me. Star Alliance is my main frequent flyer program. While I prefer to fly United, their DC hub is all the way out at Dulles which doesn't have Metrorail access yet. So instead of trekking all the way out there, I typically fly US Airways out of DCA and use my United frequent flyer account number to rack up the miles. I don't want to lose that option. Granted there are United flights from DCA, but they're only to their hubs which means I'm stuck with a layover unless my actual destination is one of their hub cities.

Metrorail out to Dulles can't come soon enough!

[Jonboy1983]

True, there is no rail link yet out to IAD, but I believe they are building one.

I, for one, would like to see this happen. I live near Philly, which is one of US' main hubs, but I also am not too terribly crazy about USAir. I have flown on AA before, and I really enjoyed them.

Plus, sure it would be bad to see competition dwindle off, but this would open up opportunities for a start-up airline to emerge. That's what's so great about our country and its capitalist ways. Mergers open up competition lanes in the form of new companies to offer competitive services...

[F1 Tommy]

Won't happen now but could very much happen in the future. This is just the AA unions messing with AMR management. Got news for them, with a merger even more redundant jobs would end up being cut.

[Ibanesse]

Originally Posted by Jonboy1983

True, there is no rail link yet out to IAD, but I believe they are building one.

Yep, the Silver Line. The extension to IAD is part of Phase II, which is scheduled to be completed by the end of 2016, assuming the budgetary Mexican standoff between Richmond and NOVA that is currently taking place ends sometime soon.

[OhioGuy]

American, US Airways one step closer to merger

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

The companies said Friday they have started confidential merger talks. 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. Its position as the No. 1 or No. 2 airline in the world, based on how many miles its passengers fly, would depend on how many routes anti-trust regulators force the combined airline to abandon.

Many industry experts say the only way American and US Airways can compete with larger rivals is by merging their strengths. US Airways would gain American's lucrative international routes while American's larger hubs would be fed passengers from US Airways' network in smaller U.S. cities.

[Buckeye Native 001]

I know a lot of people here probably want to see it fail, and while this merger probably needs to happen, the fallout would be dire for employment in the Phoenix area, considering US Airways is based in nearby Tempe and the merger would probably result in moving a lot of operations to American's headquarters in Dallas as well as layoffs locally in Phoenix.

Since US Airways also takes up a significant amount of space at PHX Sky Harbor Airport, I also can't help but wonder what will happen to the airport long term. For reference, look at what Delta's merger with Northwest did to Cincinnati/Northern Kentucky International Airport. On the other hand, Southwest still has a somewhat significant presence at PHX, whereas the only thing CVG had was Delta and its regional carriers (especially Comair, which just went under)

[Jonboy1983]

Originally Posted by Buckeye Native 001

I know a lot of people here probably want to see it fail, and while this merger probably needs to happen, the fallout would be dire for employment in the Phoenix area, considering US Airways is based in nearby Tempe and the merger would probably result in moving a lot of operations to American's headquarters in Dallas as well as layoffs locally in Phoenix.

Since US Airways also takes up a significant amount of space at PHX Sky Harbor Airport, I also can't help but wonder what will happen to the airport long term. For reference, look at what Delta's merger with Northwest did to Cincinnati/Northern Kentucky International Airport. On the other hand, Southwest still has a somewhat significant presence at PHX, whereas the only thing CVG had was Delta and its regional carriers (especially Comair, which just went under)

PHX is a huge market that will be of benefit for somebody, whether it be AA/US long term or not. Yes, Southwest has a large presence there, but I wonder if someone else would be willing to move in. Perhaps Alaskan?

[k1052]

American is talking to British Airways also about them taking a stake. I'd say this is the more probable outcome.

US Air has done this dance a bunch of times but always fails to find a partner. Even if, in the very remote case, US Air did takeover American during BK the airline would hemorrhage business/elite travelers like nobody's business.

[JDRCRASH]

I wonder how less competition in the airlines (higher prices) will affect demand for HSR.

[N830MH]

Originally Posted by bunt_q

I guess they'd have to leave Star Alliance. Boo. US Airways is BY FAR my least favorite airline to fly. Still, I like to have as many miles-earning options as possible.

Actually, I think US Airways is still remain in Star. They aren't leaving from Star. I don't think it's happening anytime soon. There's was no way to merge with AA. Because they are independent.

[SnyderBock]

Are you all really concerned about competition among the airlines? To me, it seems competition is more step than ever, in the airline industry, with the likes of Southwest, Frontier and JetBlue and such all undercutting prices from the big 4 airlines and taking their passengers away in dramatic fashion. Now both Southwest and Frontier have gone International low-cost as well. Any market where the big airlines manage to raise prices, I'd expect one of the low cost airlines to move right in and strip their market share away from that hub.

[MolsonExport]

"to serve you worse"

[OhioGuy]

US Airways-American Airlines to merge

The new airline, which will use the American Airlines name, will beef up American's network, particularly along the East Coast, where US Airways (LCC, Fortune 500) is a major player with its Washington-New York Shuttle and hubs in Philadelphia and Charlotte.

The proposed merger of US Air and American parent AMR (AAMRQ, Fortune 500), which filed for bankruptcy in November 2011, is the latest in a series of moves that have combined what were 10 major airlines in 2001 into four mega-carriers.

The combined airline will be part of the Oneworld alliance of global airlines, which includes American, British Airways and Japan Airlines. It will pull out of the Star Alliance, which includes US Airways as well as United and Lufthansa. The frequent flier plans of the two companies will be combined.

Doug Parker, the CEO of US Airways, will hold the same position with the new airline, while AMR CEO Tom Horton will serve as non-executive chairman. The deal is essentially a purchase of AMR by US Airways, as US Air shareholders will receive a share in the new company for each of their US Air shares. But the US Air shareholders will hold only 28% of the shares of the combined company, with most of the rest going to AMR creditors.

And there goes my ability to earn United miles while flying US Airways out of their mini hub at Washington National. If I decide to stick with the Star Alliance as my preferred frequent flyer program, I'll either have to deal with significantly less non-stop options from the vastly more convenient DCA, or trek all the way out to Dulles for more extensive non-stop flight options. Having said that, I suspect the US Airways-American Airlines merger may very well pull me into their frequent flyer program and my United/Star Alliance loyalty could wane.

[OhioGuy]

According to AZCentral.com:

The combined airline is expected to maintain all hubs currently served by American Airlines and US Airways. Both airlines expect that the regional carriers they own – AMR Corporation’s American Eagle and US Airways’ Piedmont and PSA – will continue to operate as distinct entities, providing connections to the combined airline.

Even though Phoenix will lose one of its six Fortune 500 corporate headquarters to Texas, the companies said they intend to maintain a “significant” corporate and operational presence in Phoenix.

So it's Dallas, Chicago, and Atlanta that remain the headquarters of the major US airlines (although had Phoenix held on as the corporate headquarters for the new combined airline, Dallas would still be home to Southwest Airlines).

American’s largest hub is at Dallas/Fort Worth International Airport. It operates a key hub in Miami that is its biggest gateway to Latin America and a Midwest hub at Chicago’s O’Hare International Airport. It also has major operations in New York and Los Angeles.

US Airways has hubs in Phoenix; Charlotte, N.C.; and Philadelphia, plus a major presence at Ronald Reagan Washington National Airport in Washington, D.C.

[ColDayMan]

The combined airline is expected to maintain all hubs currently served by American Airlines and US Airways.

Ha! We'll see how that long and how large those 'hubs' will be in 10 years.

[seaskyfan]

Seems likely that the hub traffic will gravitate towards the American hubs. I wouldn't be surprised to see both Charlotte and Phoenix lose flights over time.

[Rail Claimore]

Originally Posted by seaskyfan

Seems likely that the hub traffic will gravitate towards the American hubs. I wouldn't be surprised to see both Charlotte and Phoenix lose flights over time.

CLT hub isn't going anywhere. American has a big gap between New York, Chicago, DFW, and MIA and CLT fills in that hole very nicely as an alternative in the Southeast to DL at ATL. I'm sure that factored into this decision.

Whether PHL and PHX see downsizing is anyone's guess. I think it's a lot less likely than the downsizing that happened at CVG and MEM with Delta simply because PHL and PHX already serve large markets and are important relievers for congested expansion-limited airports in the large NY and LA markets. DCA is not losing flights either since it's too lucrative a market.