US Airways CEO: Merger with American Makes Sense
By: Philip LeBeau | CNBC Auto and Airline Industry Reporter
US Airways CEO Doug Parker says everyone knows a merger between US Airways and American Airlines makes sense.
Now he’s making sure the public sees things the same way. In a speech at the National Press Club in Washington, D.C., Parker outlined why US Airways and American Airlines should merge.
“We’ve taken a long, hard look at American, and we know that together we can build the greatest airline in the world,” Parker said. “An airline that can compete more effectively with the networks of United, Delta and others.”
Parker’s speech is the latest move in a very proactive campaign to bring about a merger with American Airlines. The US Airways CEO has already secured agreements with three the largest AMR unions to have new contracts if the two airlines come together.
Parker said, “Their support is not driven by short term gains, but rather by the fact they have taken the time to study the long term strategic underpinnings of each plan.”
The main selling point behind a merger of US Airways and American Airlines is the idea both carriers would be better positioned to compete with United and Delta , especially on the East Coast of the U.S. On paper it makes sense, but American Airlines management isn’t sure it should merge with US Airways or any other airline. Especially right now, as the carrier works its way through bankruptcy.
AMR CEO Tom Horton has said the airline will look at the possibility of merging with U.S. Airways, as well as several other carriers including JetBlue , Alaska Airlines , Frontier and Virgin America. Horton has also said American does not need to merge with another airline in order to be competitive.
Wednesday, American reported second quarter financial results showing the airline has cut losses. The bankrupt carrier posted a net loss of $241 million compared to a net loss of $286 million in the second quarter of last year. Excluding special charges related to its bankruptcy, AMR posted a net profit of $95 million. Revenue for the quarter hit an all-time high of $6.5 billion, an increase of 5.5 percent.
After announcing the second quarter results, Horton sent an email to AMR employees saying, “The results we announced today show that the new American is gaining altitude, and I hope you’re as excited as I am to be a part of it.”
Investors in US Airways are betting Parker will ultimately orchestrate a merger with American Airlines. Shares of US Airways are up 127 percent in the last six months.
— By CNBC's Phil LeBeau
@Lebeaucarnews
