Merger Between United and American?

Since America Airlines filed for chapter 13 last year, many are unsure of what the airline plans to do to bounce back. There have been many discussions about merging with US Airways but sources state the merger has been ‘greatly exaggerated’.

A consultant of R.W. Mann & Co., Robert Mann, commented, “Independent of whether they merge or not, you’re going to see higher prices because the airlines have figured out that there’s no point in competing for unprofitable business but if a merger does occur, you’ll see an acceleration of that increase.”

American Airline’s parent company, AMR, posted a staggering $1.7 billion loss during the first quarter. CEO of US Airways, Doug Parker, stated that “the carrier had signed agreements with three unions representing nearly 55,000 American employees”. He reassured his employees by saying, “Today’s news does not mean we have agreed to merge with American Airlines.” Though a merger is still up in the air, many have started wondering what the outcome would be if US Airways and American actually decide to merge.

Mann commented, “Historically, mergers have been an opportunity for Southwest to enter markets and provide [pricing] discipline. But their costs aren’t that much lower than the network carriers anymore so it’s not as if they can suddenly find new pockets of revenue.”

A merger would also mean more labor unrest. Since the merger with America West Airlines seven years ago, US Airways is still trying to integrate the two work forces. Adding a third workforce to that equation might complicate the situation further. In addition by merging the two companies would be able to create a better network for their passengers.

Joe Brancatelli, the publisher of JoeSentme.com, commented, “No carrier that has gone into bankruptcy since 2000 has survived without a merger. United went into bankruptcy, came out and merged with Continental. US Airways went into bankruptcy twice and merged with America West. And Delta and Northwest both went into bankruptcy on the same day, came out and merged with each other.”

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