Wednesday, February 13, 2013

Five things to know about the US Airways-American merger

The boards of directors of US Airways and American Airlines are reportedly meeting today to vote on a merger deal. Assuming they approve the deal, the merger announcements would formally roll out Thursday - on Valentine's Day.

Of course, a deal could fall apart right up until the last minute. But as aviation reporter Terry Maxon writes in Dallas: "Okay, there’s going to be a merger between American Airlines and US Airways. I know it, they know it, you know it. The only question is when. It’s like a pregnancy: Show us the baby, already."

So here are five things to keep in mind, assuming the merger goes through:

  1. Charlotte Douglas International Airport will be the second-largest hub for the nation's biggest airline. The airport will be behind only Dallas/Fort Worth for the number of daily takeoffs and landings by the new American Airline, and would be one of the largest single airline-dominated hubs in the entire world.
  2. The combined company will retain the American Airlines name and brand, and will be based in American's current headquarters in Fort Worth, Texas. The company would stay in American's oneworld global alliance, meaning US Airways would leave the Star Alliance. Frequent flier programs would be merged after a few months.
  3. US Airways CEO Doug Parker and his management team are likely to lead the merged airline, with AMR Corp. chief executive Tom Horton getting a ceremonial role as a non-executive chairman for a year at two. Since Parker and his team are usually very pro-Charlotte, that's viewed as a big positive for the city's future in the new company.
  4. Speaking of Charlotte's future, most analysts believe that the city's place as a hub airport is safe in the combined company. Charlotte Douglas is the only southeast alternative to Delta's megahub in Atlanta, and Charlotte has the lowest operating costs for airlines of any major hub. But with 90 percent of flights at Charlotte Douglas operated by US Airways, and more than 75 percent of the passengers at Charlotte Douglas connecting to other flights, the airport is uniquely dependent on one airline. Any changes here could be very bad news for Charlotte.
  5. Employees are waiting to see how they'll be affected. The combined company will have more than 100,000 workers. More than 7,100 are based in Charlotte. Parker has said the combination is about growing the airline, not cutting flights, but some cutbacks are inevitable - otherwise, there wouldn't be any cost savings. This story in the Winston-Salem Journal about 850 US Airways call center workers waiting to see if their jobs are safe gives a flavor of what's to come.


Anonymous said...

Not sure why this isn't a bigger story here. If American shifts it's international flights to Charlotte, this would be huge for us. Tremendous credit goes to Jerry Orr for keeping our fees low and making our airport as attractive as possible to the airlines. But the last line in Paragraph 4 is a huge understatement. I believe there is NO chance the Panthers will leave Charlotte, but from what I have read there is at least some chance CLT could lose its status as a hub. That's what we need to be talking about.

Wiley Coyote said...

Keeping our fees low?

Jerry Orr is a pirate and for years, Charlotte was the highest cost airport to fly out of.

My company regularly drove to Greensboro and flew back to Charlotte for half.

The convenience of paying double just to fly direct wasn't worth it.

Anonymous said...

Wiley... are you a janitor? You must have one of the few jobs, where you time is woth less than your money. An additional $50-200 for 3.5+ difference (at least 1.5 hours driving, plus driving costs and at least an hour layover) and fewer inbound flights means your time is worth less than $25 per hour.

Sucks man.

As a fan of my hometown, I will glady use CLT whenever i fly.

Anonymous said...

I think Wiley misses the point. It isn't the cost of the tickets they are referring to. It is the gate costs charged to the airline that are low and thus why it is attractive to the airlines. What hurst OUR ticket prices are the fact that we are in a major hub with mainly connecting traffic. It is the same in other hub cities in small metros

The Maestro said...

The screwing of passengers originating in Charlotte by high airfares will get worse. And it is already outrageous. I have no love lost for USAirways.

Anonymous said...

Yep, the fares were ridiculous back in the '90's and early 2000's, but things improved greatly when ATA & Independence Air came to town, later to be replaced with Airtran & JetBlue. I started saving a couple hundred dollars on tickets after their arrival, and still do today. Hopefully Southwest continues that trand when they replace Airtran this spring and hopefully they and JetBlue will add more flights in the near future. In addition, we can hope that Frontier and Virgin America find their way in too.

Anonymous said...

This will be the formation of the world's WORST airline. Just when you thought it couldn't get any worse......This is NOT entirely great news for CLT, and in no form or fashion will we ever overtake ATL, that place is beyond behemoth.

Anonymous said...

Wiley, it is not airline ticket cost it is cost per passenger. CLT has one of the lowest cost per passenger for airlines. Huge advantage for Charlotte. The cost of passengers coming through CLT is way less than Philadelphia for example.

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