American, US Airways merging, US Airways says
Updated 6:44 a.m. EST Feb. 14
(MoneyWatch) American Airlines and US Airways (LCC) are merging, US Airways announced on its website, creating the world's biggest carrier.
Under the deal, the combined airline would keep the "American" name. It would still require federal approval, although that is virtually ensured. US Air CEO Doug Parker is expected to lead the combined company.
A merger of US Air and American would surpass a 2010 tie-up between United Airlines (UAL) and Continental and a 2008 deal joining Delta (DAL) and Northwest. The merged American would be the largest carrier and sport a market valuation of roughly $10 billion.
- Sources: American Airlines, US Airways on verge of merging
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Although airlines tout such consolidation as a way to cut costs and expand service amid intense competition, whether industry mergers raise fares is an open question. Many analysts say yes because reduced competition in any business often results in higher prices. One study found that ticket prices went up more than 20 percent between Detroit and Atlanta after Delta bought Northwest. Fares went up more than 30 percent on routes between Chicago and Houston, as well as Newark to San Francisco, after the United-Continental deal.
In seeking to run more efficiently, merging airlines also often cut capacity and eliminate routes.
American close to merger with U.S. Airways
Other analysts are more optimistic about the potential benefits to travelers. They say the three largest U.S. airlines still must compete with discount carriers such as Southwest (LUV), which has flourished for years by offering low-cost flights and no-frills service.
The consolidation trend is largely blamed on the price of fuel. Oil now costs so much more per barrel than it did 10 years ago that one analyst says the margin of profit on many flights has shrunk to the value of a single seat. That means an airline can lose money if it flies with one single empty middle seat. The days of elbow room are over.
American Airlines has been operating under court supervision since declaring bankruptcy in November 2011.
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Oh, by the way, the banks are even bigger now. As much as I may think Obama is doing an "OK" job that IS one of Obama's failures as POTUS.
and the "lowest common denominator" airline...
When US Air "Merged" with PSA (Pacific Southwest Airlines)
if was basically a "Pac Man" move where the bigger, bloated,
mediocre carrier" took over the cutting edge, creative,
innovative PSA and quickly stomped out its great culture
and employee and customer loyalties.
Southwest became the successor to PSA's creative culture
and innovative,profitable business practices.
Bigger is not always better.
The consolidation in the airline industry has not been a good
thing for travelers and consumers...
My message to the people of Phoenix is not to believe any promises American makes. "Two great airlines, one great future" was the slogan American used when purchasing St. Louis based TWA.
CEO Don Carty promised to make St. Louis their mid-continent hub until the deal went through, a billion dollar runway was completed, then [basically] said "Eh, I prefer not".
God help you, Sky Harbor.