US Airways is reportedly in talks with creditors for American Airlines about a possible merger -- a deal that would reduce the number of major big national airlines to just three.
According to published reports and industry analysts, US Airways has put forward plans to take over American, which is in the process of restructuring its operations through bankruptcy.
The goal, according to a Bloomberg report, is to complete a deal before American’s parent company AMR exits bankruptcy proceedings. AMR, which filed for bankruptcy protection in November, recently received permission to extend the filing deadline for its reorganization plan until Sept. 28 and said it plans to ask for its labor union contracts to be voided.
US Airways is likely to put forward the argument that the two airlines combined will be stronger than if they remained as separate companies, said Ray Neidl, an aerospace analyst with Maxim Group.
The airline industry has been going through a period of consolidation, with the most recent merger clinched between United Airlines and Continental Airlines, who joined forces in 2010. Delta Air Lines reached a deal to combine with Northwest Airlines in 2008.
“This isn’t a marriage made in heaven, like Northwest and Delta, or Continental and United,” Neidl said. “But US Airways is the last girl on the dance floor right now.”
US Airways CEO Doug Parker has made no secret of his desire to join with American, telling reporters this week that advisers have been hired to consider a bid. But during the current bankruptcy period American is barred from filing competing plans, such as a merger proposal.
Meanwhile US Airways is buying up Internet domain names reflecting a potential merger.
A spokesman for US Airways confirmed that company registered domain addresses that include the names of both airlines, including usairways-american.com and american-usairways.com, according to The Associated Press. US Airways stock was up 2 percent to $7.48 a share.
A merger between American and US Airways would give American an improved presence in the East, where it has been squeezed out by Delta and United, said Neidl. It would also give American a sturdier presence in the West, given US Airways’ strong presence in Phoenix, Ariz., he said.
The deal would come as the U.S. airline industry is enjoying an upswing, Neidl added.
Consolidation has been a big help, he said, and airlines have done a good job of controlling costs. They’ve also been able to tap into new revenue sources, such as charging for luggage. However, one worry for the industry going forward is the rising price of oil.
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