US Airways/America West merger confirmed

The long-rumored merger of US Airways and America West that has been officially announced is creating the first nationwide full service, low cost airline in the US.

“A combined US Airways/America West places the new airline in a position of strength and future growth that neither of us could have achieved on our own,” said Doug Parker, America West Holdings Corporation chairman.

The new airline – to be called US Airways – will offer customers simplified pricing, international scope, access to low-fare service to over 200 cities, and amenities that will include a robust frequent flyer program, according to news releases put out by the two companies.

Details of the deal:

• The transaction is expected to be funded with about $1.5 billion in new capital.

• The new airline will operate under a single brand of US Airways, but its operational labor groups will be integrated over two to three years with an emphasis on minimizing any dislocations within the work groups.

• The airline expects $600 million in cost savings through route restructuring and cost savings.

• The new airline is expected to have one of the most efficient work groups in the industry. Once the anticipated cost savings and revenue synergies of over $600 million are implemented, the new airline will be positioned for profitability at oil prices above $50 a barrel.

US Airways now serves 179 cities and America West 96 cities. Merged, the airline will become the fifth largest in the US as measured by domestic Available Seat Miles (ASMs).

Once merged, the airline expects to have primary hubs in Charlotte, Phoenix and Philadelphia; secondary hubs will be in Las Vegas and Pittsburgh.

Approval of the merge will have to be given by the US Bankruptcy Court overseeing US Airways current situation.

Report by David Wilkening