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With hubs at Charlotte-Douglas International, Philadelphia and Phoenix Sky Harbour International airports, US Airways merged with America West Airlines in 2004 and is a publicly-listed airline and one of America's major network airlines. Using a fleet of narrow and wide-body Airbus, Boeing and Embraer aircraft, US Airways operates a network of domestic and regional services within North America and international services to South America and Europe. US Airways is a member of Star Alliance.
Location of US Airways main hub (Phoenix Sky Harbor International Airport)
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The saga that ensued after the US Department of Justice in Aug-2013 sued to block the merger between American Airlines and US Airways is now officially over. Arguably, not too much will change once the conditions of the settlement are implemented - which begs the question of why the two sides did not act more responsibly in the first place to prevent a protracted and futile legal exercise that only added extra expense to the already expensive proposition of combining two airlines.
The whole affair smacks of wasteful macho grandstanding. In the end, only limited concessions were imposed - but presumably the airlines had not been prepared to concede them in negotiations - and nobody comes out of this looking clever.
The bulk of the concessions agreed to by American and US Airways – slot divestment at Washington National Airport – was not surprising since speculation was rampant that the carriers would likely have to shed some slots at the airport in order to move forward. While American and US Airways opted to stick to their bullishness that no divestment was necessary, in the end holding stubborn to their beliefs resulted in a three month delay of the merger moving forward – hardly responsible behaviour for a company that is attempting to build a powerful global carrier.
US carrier results in their Atlantic entities during 3Q2013 reflect an uptick predicted by IATA in the region at the onset of the quarter as business confidence is showing signs of improvement and economic conditions in Europe and the US are showing some positive development.
While the 16-day US Government shutdown in Oct-2013 may put a slight damper on corporate demand, most of the major US airlines believe the North Atlantic will continue to gain momentum as it seems capacity growth appears rational.
American and Delta continue to tout their respective joint venture business arrangements with their respective partners in the oneworld and SkyTeam alliances. Meanwhile US Airways’ strategy to grow its corporate revenues across the Atlantic also appears to be bearing fruit. The carrier is actively pursuing corporate accounts in Europe without the benefit of joint sales included in the immunised trans-Atlantic joint ventures operated by the three large global groupings.
Similar to US carriers Delta and US Airways, Southwest Airlines recorded a strong financial performance in 3Q2013, driven partly by its ability to raise fares as well as some relief in unit cost pressure. The carrier remains optimistic about 4Q2013 even as it faces some headwinds stemming from the US Government shutdown and the sliding of busy travel days for the US Thanksgiving holiday from Nov-2013 to Dec-2013.
Southwest reaches a milestone in Nov-2013 when its de-hubbing of Atlanta takes full effect. By Apr-2014 Southwest and AirTran will deploy 160 daily flights from the largest US airport in terms of passenger enplanements. At that time Atlanta will be roughly the same size in terms of departures as Houston Hobby or Phoenix – two of Southwest’s top markets. But it will pale in comparison to Chicago Midway, which currently has roughly 253 daily departures.
Southwest’s management has concluded that Atlanta was a “challenge” for AirTran prior to the carrier's acquisition by Southwest and the de-hubbing should produce improvements in bolstering traffic in the local market from the airport. Carrier executives are also stressing the company’s shrinking footprint in Atlanta should not be interpreted as the airport’s value diminishing in the combined Southwest-AirTran network.
US Airways believes it can recoup lost revenue triggered by a 16 day US Government shut-down after recording reasonably solid 3Q2013 results, including higher than expected unit revenues for the three months ending 30-Sept-2013.
As the outcome of the US Department of Justice (DoJ) challenge to block the merger of American Airlines and US Airways is tough to predict, both carriers are moving forward in network expansion on a stand-alone basis. For US Airways it means international expansion from its Charlotte hub as a means to close the gap in a variable financial performance from 2Q to 3Q, while American appears to be crafting a Pacific strategy that entails a build-up in Dallas/Fort Worth to strengthen its position in the trans-Pacific against United and Delta.
Underlying JetBlue’s recent headline grabbing release of its new premium product that includes semi-private suites, is a network strategy and expansion that continues unabated, resting on the pillars of expanding from Boston, Fort Lauderdale and its strategic base and headquarters of New York JFK.
The latest round of market additions adhere to the carrier’s stated goals of broadening its reach into the Caribbean as Trinidad and Tobago is added to its growing network in the region. At the same time, JetBlue’s milestone 50th destination from its ever-important Boston base is Savannah, Georgia, a largely leisure destination which presently is served by US majors with regional jets to their large hubs.
With the planned new service to Savannah, Port of Spain and Port Au Prince, JetBlue is taking a three-pronged approach, serving all those markets from its strategic bases – most notably Fort Lauderdale, a market JetBlue is growing as a launch pad for strengthened service to the Caribbean.
American Airlines, US Airways and the US Department of Justice (DoJ) have approximately two months to sharpen their arguments supporting and opposing the merger of the two carriers after the DoJ dropped its bombshell in Aug-2013 with a lawsuit to block the merger entirely. In this it was supported by several state administrations, including that of American's home base in Texas.
The airlines have succeeded in their quest for an early trial date in Nov-2013, against DoJ’s request to delay until Feb-2014. Now that a firm date has been established speculation is rising that a potential settlement between the parties may be reached prior to their day in court.
But if those theories fail to materialise, then each side faces the formidable tasks of convincing a judge that their respective arguments are correct. It is a high-stakes gamble for each of the entities, and while popular industry opinion is heavily weighted towards the opinion that the DoJ’s argument is illogical, the final judgment is tough to predict. Meanwhile, the outside world continues to turn and the would-be merger airlines must continue as if it were business as usual.
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