US Airways Says Merger with American Airlines would Generate $1.2BN per Year

As American Airlines management continues to insist its goal is to emerge from bankruptcy as a stronger, leaner stand-alone airline, US Airways is upping the rhetoric on a potential merger:

Speaking on a conference call with reporters and analysts about US Airways' first-quarter earnings, Scott Kirby said a merger of his carrier and American parent AMR Corp (AAMRQ.PK) would generate more savings and revenue improvements than AMR's plan could produce on its own.

"There is a tremendous amount of value created by merging US Airways and AMR, and we can and should use a portion of that to give employees more than AMR can on a stand-alone basis," Kirby said.

US Airways has not made a bid for AMR but said it hopes to start merger talks with its reluctant rival, which is restructuring in Chapter 11.

AMR so far has shunned interest from US Airways, which has already won the support of AMR labor unions. The unions say that more jobs can be saved by casting their lot with US Airways than with AMR alone.

An AMR spokesman declined to comment on Kirby's estimates. The company's CEO, Tom Horton, has said US Airways' interest would not alter AMR's efforts to formulate its own, stand-alone restructuring plan in bankruptcy.

This is not breaking news and seems like a big exaggeration to me, considering the cost savings will come from "reducing or eliminating facility space and management headcount...combining computer systems and through the improved purchasing power of a larger airline" all while saving 6,200 jobs. (AA is contemplating cutting 13,000 union jobs)

Nevertheless, US Airways is ravenous for a merger partner and I think it is fair to say they are eager to put their failed merger with AmericaWest behind them. As I mentioned earlier this week, allying with AA labor unions might allow them to do this.

So look for more rhetoric form US Airways in the coming week, as they try to make the case that a merger with AA is inevitable. It's not--but if I was a betting man, I'd say the odds of a merger are increasing by the day...


Leave a Comment

Your email address will not be published.