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January 20, 2012

US Airways has AMR merger plan, Bloomberg reports

Starting on the day that American Airlines' parent company, AMR Corp., filed for bankruptcy, rumors have swirled that US Airways will try to buy the troubled airline.

Bloomberg News' latest piece about a possible US Airways-AMR tie up says that US Airways' executives are analyzing how to combine the two carriers to bolster a weak domestic route and improve revenues.

"President Scott Kirby is leading US Airways’ analysis of how to combine the airlines, said the people, who asked not to be identified because the matter is private. Any bid may still be close to a year away, because AMR now holds the exclusive right to file a reorganization plan, the people said.

American has pared its flight network to the point that some corporate travelers have gone elsewhere, leaving the money- losing carrier unable to support most of its hub airports, one person said. That deficiency could be solved by combining American, the third-largest U.S. airline, with No. 5 US Airways, the people said....

Traffic to American’s hubs would grow by funneling in travelers from US Airways, the person said. In turn, a stronger domestic system would feed into American’s routes across the Atlantic and to Latin America, said the person, who declined to give financial details because the numbers are preliminary," the article says.

US Airways chief executive Doug Parker has often said that consolidation in the industry is necessary. His carrier made unsuccessful bids for Delta Air Lines and United Airlines in the past few years.

-Andrea Ahles

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Comments

airlinerealist

How on earth could US Airways buy an airline with $4 billion in cash? I don't see how they could secure the credit to do that in this environment.

I think Doug Parker is merger obsessed because he wants an easy route to turn his third-rate airline into a global player.

Eagle Employee

I have a BETTER IDEA!!!

There is this other airline... you may have heard of it... Its called American Eagle...

This would be a perfect time to merge AA and AE together and save the cost of the spin-off and have greater control over costs... and just think APA and AFPA...more members!!!

ACitizen

$4 billion in cash! Sounds like a target for Bain Capital.

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