A Merger of American and US Airways?

 

We’ve received several questions about US Airways’ apparent interest in merging with American Airlines…first some background.

Last November American filed for Chapter 7 bankruptcy protection. American provides our airport with service to Dallas and Chicago. The question we’re being asked: if US Air and American merge, what will that mean for Springfield’s service to Dallas and Chicago?

Here’s the short answer — I don’t know. Trying to predict the outcome of airline mergers is beyond tricky. Now for the long answer…

Let's begin with a simple fact: US Air does not have significant status at either Chicago or Dallas.

US Air says a merged airline would have it corporate headquarters in Dallas, which is the current corporate home of American.  American is the No. 1 airline at Dallas/Ft. Worth International Airport. Would the combined airline sacrifice its No. 1 status at the 4th largest airport in the country? Not likely. That probably means our service to Dallas would be safe in a combined airline. Moving on to Chicago…

American is not the No. 1 airline at Chicago O’Hare. But would the combined airline want to reduce its presence there?  O’Hare is the second largest airport in the country. Its central location makes it a good hub for coordinating east-west passenger flow across the country. So, that probably means our Chicago service is safe in a combined airline. But remember — trying to predict the outcome of airline mergers is beyond tricky!

There’s really a bigger question to ask — is US Air serious about merging with American? Consider the following:

  • A few years ago US Air made considerable noise about merging with United, and then Delta. United ended-up merging with Continental; Delta merged with Northwest.
  • The current management team at US Airways successfully merged US Airways with America West. That was back in 2005. Even though that merger was seven years ago, the combined airline has yet to reach deals with its combined labor unions. As you read on, keep that point in mind…
  • US Airways has approached the labor unions representing many of American’s employees. Last week US Air announced it has signed agreements with three of those unions that, “would govern collective bargaining agreements…at the merged airlines.” The American's Allied Pilots Association union says that US Air has offered American pilots an immediate 5.5% raise.

That last bullet point sounds pretty good for US Air, doesn’t it? It apparently has the support of many American employees for a merger. But then, this tidbid came out in the Dallas Morning News:

The International Association of Machinists and Aerospace Workers put out word Tuesday that its members at US Airways aren't happy about US Airways' announcement that it has deals with American Airlines' three unions for a possible merger. District 141 president Rich Delaney called events "insulting" and "disrespectful" since US Airways hasn't been able to get a deal with its own unions…

As you can see, there are many, many elements in play here. And there are a multitude of reasons, besides labor, that could swing a possible merger one way, or the other. Is US Air serious about a merger? Possibly — or it could just be waging psychological warfare against an opponent airline.

 

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