US Airways CEO Tells National Press Club It's Time To Merge With AA
FORT WORTH (CBSDFW.COM) – US Airways CEO Doug Parker is travelling the country telling anyone and everyone that this is the right time for his airline to merge with Fort Worth-based American Airlines.
Parker told the National Press Club today, "US Airways is here now and ready to get this done now."
Now in bankruptcy, American is trying to reach new contracts with its main unions, and is weighing a merger and other options. Parker says everyone believes the two airlines should merge now, with one exception.
"I find it noteworthy that the only opposition that seems to exist in this merger is the senior management at American," he said.
After releasing good second quarter results today, American's CEO Tom Horton told employees, "This performance, including our industry-leading revenue gains, reflects the strength of our network and alliance strategy."
But while American said its gaining altitude, US Air's CEO picked apart American's strategy of focusing only on its hubs at DFW, Miami, Chicago, New York's JFK, and Los Angeles. Here's a verbatim portion of Parker's speech:
"That leaves a large hold in the newtwork up and down the East Coast. This means American cannot easily serve the popular and highly lucrative East Coast region, which causes it to miss out on an enormous source of corporate business, as well as all the consumers who travel up and down the Eastern seaboard.
In the last five years before it filed for bankruptcy, American Airlines slipped from being one of the top three domestic airlines in the East, West, and Central Regions of the U.S., to being ranked no better than fourth in any of those regions.
American's network weakness and the consequent revenue challenges can only be fixed through a merger, and only through a merger with US Airways."
Parker told the audience that there is little overlap between American and US Airways, and that their route networks are complentary.
Mark Drusch is a retired airline executive at Continental and Delta. He agrees American's current strategy is weak against the much larger Delta and United Airlines. Drusch says competition with Southwest will soon heat up too.
Drusch called the situation a tug-of-war between CEOs, American's and US Airways. But he said the real test will come August 8, when the 10,000 members of the Allied Pilots Association vote on a new contract with American.
He said that will likely determine how quickly there could be a merger.
