American Airlines bankruptcy may lead to merger with US Airways
Posted on 2 Dec 2011 by Matthew Tyndall
According to the Economist and Reuters, American Airline’s recent bankruptcy filing could clear out some of the hurdles that have stood in the way of the AA and US Air merger. What are your thoughts on how this could affect Charlotte?
Since the Delta/Northwest and United/Continental mergers, American and US Airways have been considered logical partners for a potential combination, but analysts have said American’s high labour costs and unresolved contracts with its unions make any deal too difficult to negotiate.
Sweeping cost cuts in bankruptcy could remove one potential hurdle, but analysts and bankers noted that US Airways still has its own challenges of having to integrate labour groups following its 2005 merger with America West Airlines…
“From the standpoint of US Airways, it would be a huge opportunity,” said airline industry consultant Robert Mann. “It would take them into markets they don’t have access to today from a hub standpoint.
“Looking at it from the American Airlines’ perspective, it doesn’t make the combined American and US Airways network competitive with Delta or United (Airlines),” he said.
Not only have American’s main rivals shaken off their pension costs and other liabilities; some have grown bigger and trimmed expenses through mergers (United with Continental and Delta with Northwest). After losing a few pounds in its restructuring, American may become a more attractive marriage partner, perhaps for US Airways.
via The Economist