US Airways CEO: Consolidation needed

It seems like a few years can't go by without US Airways CEO Doug Parker talking about a merger. Parker came over from America West Airlines when it merged with US Airways in 2005, and by the end of 2006 had made a hostile bid for Delta. That fell through pretty quickly, but didn't put an end to speculation that Parker would be interested in shopping his airline around or looking to combine it with another. Back in April 2008 Parker mentioned in a letter to employees that the airline would merge if the time was right, and yesterday, addressing the company's annual meeting in New York, he said that further consolidation was much needed in the airline industry.

"The industry continues to be far too fragmented... The result is far too many hubs across the nation and far too many seats competing for those same passengers," Parker said. He also stated that the Delta-Northwest merger was a good thing, since it went pretty far in helping to simplify the industry, but that it wasn't enough: the industry needs to get smaller if it wants to become profitable.

Who could US Airways potentially merge with? The first option that people seem to mention is United. The airlines tried to merge back in 2000, but this was rejected on antitrust grounds; United and US Airways talked last year about a merger once again, but this time United walked away. Nothing has been ruled out between the two airlines in the future, though. American could be a good fit for the airline, too. And even if US Airways doesn't end up merging, the fact remains that capacity needs to be further cut for airlines to stay afloat during these tough economic times.

photo by matt.hintsa from Flickr, licensed under the Creative Commons


Anonymous said...

It is the bankruptcy laws of the US that prevent the real change that needs to take place. Bad management is allowed to continue and use their employee's pension funds like an ATM. If they simply allowed a few carriers to liquidate the pain would be strong but brief. Meanwhile you have the likes of American buying TWA (mistake) and two carriers like US Air and America West (both should be gone) delaying the obvious. Let a few disappear.

Anonymous said...

I just want to know what kind of affect this is gonna have on layoffs for reservation agents with any kind of merger, The last thing anyone needs is to loose anymore jobs

tripnburn said...

Delta + Northwest was unusual in that they were both strong and became stronger.

AA + TWA is more typical. TWA was weak and became dead. And we are all better off for that (except for the poor folk in St. Louis)