19-Jul-2012 12:11 PM

US Airways promotes benefits of mergers, a merger would solve American Airlines' network challenges

US Airways Group chairman and CEO Doug Parker, at a National Press Club Luncheon, stated (18-Jul-2012) how mergers have benefited United and Continental, Delta and Northwest, Southwest and AirTran, and America West and US Airways. Details include:

  • Benefits of mergers: Mr Parker stated there are real advantages to combining airlines for employees, customers and communities. "All four combined airlines provide better networks and are now profitable. By combining complementary networks to provide more attractive and efficient service, mergers have led to increased traffic, cost reductions, and vigorous competition ... The benefits of this trend extend way past the bottom line: there are real advantages to combining airlines for employees, customers and communities. Employees will benefit from greater job security and more long-term opportunities if they're working for a successful airline. Customers will gain more flight options at better times to more places," he said;
  • American Airlines' network challenges: Mr Parker outlined the fundamental network challenges that stem from American Airlines' "cornerstone" strategy, which focuses on five large cities instead of a comprehensive network. Mr Parker noted how American Airlines has lost domestic market share as the strategy does not address the network deficiencies of American Airlines versus United and Delta. He said, "Simply put, American has hubs in Dallas, Chicago and Los Angeles to connect people around the United States, and strong international gateways in both JFK and Miami. But that leaves a large hole in the network up and down the East Coast. This means American cannot easily serve the popular and highly lucrative East Coast region, which causes it to miss out on an enormous source of corporate business, as well as all the consumers who travel up and down the Eastern seaboard." Mr Parker explained how a merger with US Airways solves American Airlines' network challenges and would create a more comprehensive network. In particular, he noted that the networks are complementary;
  • Merger protocol: Mr Parker noted that American Airlines recently announced it was ready to move forward with a potential merger, and reiterated his desire to present US Airways' plan to American Airlines. He said, "All that we want is a fair chance to present our plan, and to compare it to all others in a process that doesn't disadvantage any of the options, and that determines the best plan based on what is best for the owners of AMR — its creditors. We understand there may be as many as four other airlines included in this merger analysis project, and we welcome the competition. We are certain that any objective analysis will conclude that the best plan for the creditors, employees and customers of American is a merger with US Airways during the bankruptcy process;
  • Unions: Mr Parker praised the efforts of American Airlines' three unions – the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union – to support the merger. [more - original PR]

US Airways: "We've taken a long, hard look at American, and we know that together we can build the greatest airline in the world—an airline that can compete more effectively with the networks of United, Delta and others. Together, American and US Airways can connect more communities and provide greater benefits for American's creditors and US Airways' shareholders than either airline could on a standalone basis. Furthermore, we would also save thousands of jobs and offer better compensation and long-term opportunities for employees of both airlines," Doug Parker, chairman and CEO. Source: Company statement, 18-Jul-2012.

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