Passengers hoping airline merger means more deals
Updated On: Feb 14 2013 08:13:10 PM CST
After many months of courtship, American Airlines and US Airways have sealed the deal on Valentine's Day. The merger is an $11 billion dollar deal.
Passengers at the Santa Barbara Airport are hoping it will give them better options, more frequent flyer perks, and nothing less than good service.
US Airways CEO Doug Parker has landed the big merger he sought for years. Now the soon-to-be CEO of the new American Airlines has to make it work.
Planes need painting. Frequent flier programs have to be combined. And the new airline will still be weak in Asia and need to win back business travelers who have been drifting away to other airlines.
The two airlines announced an $11 billion merger Thursday that will turn American into the world's biggest airline, with some 6,700 daily flights and annual revenue of roughly $40 billion. It's a coup for Parker, who runs the much-smaller US Airways and has long pursued a deal like this one with the strong belief that airlines would have a better shot at consistent profits if they bulk up through mergers.
The latest deal will mean that the four biggest U.S. airlines are all the product of mergers that began in 2008. Those deals bring benefits, but they also show that putting together two airlines smoothly is not easy.
Some of the work on the latest combination has already been done. Pilots form both airlines have agreed to the outlines of a deal that should make it much easier to get a final, joint contract. And Parker is inclined to use American's computer systems such as those that track reservations and passenger information, he said on a conference call. He said past mergers have shown that it's easier to use the bigger airline's technology, because then fewer people at the smaller airline need to learn it.
Noting those factors, JP Morgan analyst Jamie Baker predicted a "relatively smooth" transition.
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