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US Airways CEO brings American Airlines merger pitch to Washington

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Wednesday, July 18, 2012
By Samantha Bare
Cronkite News

WASHINGTON – Tempe-based US Airways does not need to merge with American Airlines to remain viable, but consolidation would create a stronger competitor than either business can be on its own, US Airways CEO Doug Parker said Wednesday.

But Parker warned that his airline will not wait forever for American, which filed for bankruptcy protection in November. The best time to merge is during bankruptcy proceedings, he said, not after.

“US Airways is here now and we’re ready to do this now,” Parker said in a speech at the National Press Club, where he was joined by leaders of three of American’s labor unions. “There’s no guarantee that’ll be the case forever.”

A spokesman for American said it will not be rushed into a decision.

“This will be a disciplined process guided by the facts and will not be influenced by baseless rhetoric,” American Airlines spokesman Michael Trevino said in a prepared statement.

American has talked about the possibility of a merger with several other airlines, in addition to US Airways, according to published reports.

But Parker said Wednesday that a merger with US Airways makes the most sense. He said American is currently missing out on an “enormous source of corporate business” on the East Coast and a merger would help fill in the gaps in cities like Philadelphia, Charlotte, N.C., and Washington, D.C.

“We are the No. 1 carrier at each of our hubs,” he said. “We focus on areas where we do well.”

Parker said there is “very little” overlap between the companies, erasing the need to scale back on services such as flights in a merged airline. Rather, consumers will have more options and enjoy a more competitive airline industry because the merger could create a strong challenger to Delta, United/Continental and others.

While he wants a merger, Parker said US Airways – which employs 9,239 people in the Tempe area – does not need it.

“We are producing record revenues, record yield and very strong load factors,” he said, noting that the company’s second-quarter results will be released next week.

He said merging during American’s bankruptcy would save several “transactional expenses” and create a better environment for working out details of a consolidated corporation.

A merged airline would be stronger, meaning better long-term job security for the companies’ combined 100,000 employees, Parker said.

The three largest unions representing American’s employees have supported a merger with US Airways since June, according to published reports. Leaders of the unions for American’s pilots, flight attendants and ground workers were seated at the head table for Parker’s speech Wednesday.

In Parker’s merger scenario, US Airways would move its headquarters from Tempe to Fort Worth, Texas, where American is based. The airline would retain the American name, which Parker said is a stronger brand than US Airways.

But while Parker said a merger is the “right choice,” Trevino said American wants to evaluate all options for the best choice.

“Our increasing strength positions us well to evaluate the full range of strategic options versus our reorganization plan, to maximize value for our stakeholders and deliver the best outcome for our people,” Trevino said.