Merger rumors flying fast and furious in airline biz
US Airways’ CEO Doug Parker finally admits the worst-kept secret in the business: the airline is studying a merger with bankrupt American. Perhaps unlikely, analysts say. But merger news of all sorts has been dominating airline talk in the past few weeks.
"We can now decide whether it’s best to operate as a standalone or to participate in further consolidation over time, and that’s what we intend to do," said US’s Parker.
At the same time, Delta Air Lines Inc. is studying US Airways Group Inc. as a possible acquisition target, reported the Wall Street Journal. The newspaper quoted "people familiar with the matter."
US Airlines is open to both being a buyer and a seller. And then it gets even more confusing.
But one thing stands out for certain: The various posturing could usher in a new wave of airline consolidations.
Tie-ups and mergers have reduced the number of major US airlines from 20 to five in the past 20 years. Any new merger faces intense scrutiny, however, from US government officials concerned about how the business is becoming dominated by fewer and fewer airlines increasingly able to command higher prices because of their widespread control.
What’s in it for the airlines? In addition to the possibility of raising prices, carriers can also jettison money-losing routes and tighten control in their hubs.
Delta is already the world’s No. 2 airline by traffic.
"Delta sees itself as a consolidator in the airline industry and is studying several options," Journal sources said.
Any US-American merger is not very likely because of many reasons, including the fact that "AA has the exclusive rights to file a Chapter 11 reorganization plan for almost another year," says AP.
The airline currently known as US Airways is itself the result of a merger. It happened when America West bought up and merged with US Airways, choosing to keep the US Airways name and discard its more regional America West name.
Other airlines have been folded into the US Airways brand over the years as well, including perhaps the best known and even the best-loved, Piedmont.
US Airways tried to grab Delta during that airline’s Chapter 11 proceedings but failed. ,
When AA’s exclusivity period ends, speculation is that US Airways may find itself in a bidding war. That could also inevitably involve Delta.
By David Wilkening
David
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