After weeks of repeated denials that it was even considering a merger with US Airways, American Airlines has agreed to “study” the prospects of a marriage between America’s third and fifth largest air carrier by traffic.
American Airlines says it is agreeing with creditors to consider potential mergers while it is still under bankruptcy protection.
American parent AMR Corp. says that the company and its bankruptcy creditors agreed to develop “potential consolidation scenarios,” but that didn’t mean it would pursue a deal with any particular party.
Still, Friday’s announcement suggested that events could be moving faster than AMR had expected since US Airways turned up the pressure for merger talks.
Live and Let’s Fly probably got ahead of itself in hinting that AA/US merger talks were already in advanced stages, but a source continues to tell me that off-the-record talks between management are ongoing. I still predict, as bad as it will be for the consumer, that we will eventually see a merger, completing the reduction of the big-six to the big-three (and Southwest).
Unlike past mergers–consolidation in this case is being pushed by labor. This is US Airways’ dream scenario, though Fozz is right that the AA folks are just fooling themselves if they think a merger will improve matters, let alone magically solve everything.
On Friday hundreds of pilots and other employees marched into AMR headquarters in Fort Worth, Texas, and in New York to deliver a message of “no confidence” in AMR management. The unions believe that a combined company would cut fewer jobs and stand a better chance at competing with industry leaders United and Delta.
US Airways said, “A combination would be best for both companies’ employees and customers, as well as for AMR creditors and US Airways investors.” That’s code for, “The merged airline will seek higher profits through a more meager route map, higher fares, and the reduction of ‘redundant’ labor.”
One thing that is performing exceptionally well is US Airways stock–which has more than doubled this year. I wish I had bought some of that instead of pre-bankruptcy AMR…