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American Airlines Merger: A Done Deal?


The merger of American Airlines and US Airways is a done deal, claims most of the trade press; it’s just a matter of time and working around a few ego barriers. Certainly, most of the “stakeholders” seem to want it, including US Airways, the main airline workers’ unions, Wall Street, and creditors. In fact, the only significant stakeholders who aren’t on the bandwagon are the federal-government agencies that would have to approve a merger, the current American management team, and the consumers who will face the consequences.

Why the suspense? Even though US Airways is the smaller of the two lines, everyone expects that the US Airways management team will mostly run the combined operation. And the self-proclaimed industry “insiders” say the remaining barrier is the bruised egos in American’s executive office. That’s certainly credible: Over the years, I’ve seen lots of important corporate decisions based on where the CEO’s wife wants to live or other equally trivial requirements.


  • Despite industry blather about the “increased scope” of a merged line, the main effect would be lessened overall competition. Certainly, a merged line could take you more places than either line could, separately. But the merged line isn’t likely to be able to take many of you places you can’t already reach on at least one of the legacy lines.


  • The combined line will retain the “American” name but be governed mainly by the US Airways management team.
  • Even though maintaining major hubs as close together as New York, Philadelphia, and Washington seems to make little sense, the merged line couldn’t consolidate them: None of those airports can handle much more traffic. And American’s Chicago and Dallas-Ft. Worth hubs and US Airways’ Charlotte and Phoenix hubs look like they’ll remain as is for some time.
  • The combined line will probably retain American’s membership in the Oneworld Alliance, along with the various partner-line benefits of that alliance. The downside to that is that British Airways, the most important partner, gouges frequent-flyer award trips with stiff fuel surcharges.
  • You will certainly retain both lines’ lounge-club memberships, but sooner or later you’ll lose Star Alliance reciprocity.



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