The CEO of US Airways predicted American Airlines creditors will support his plan for a merger, but said he may not be interested after American comes out of bankruptcy protection.
Doug Parker runs US Airways Group Inc. and has been vocal about wanting to merge with American. He said Wednesday a merger while American is in Chapter 11 is better because the bankruptcy code makes it easier to get rid of planes the combined airline doesnt want, and to renegotiate airport leases and other contracts.
Were ready to do this now, Parker said at the National Press Club in Washington. Theres no guarantee thatll be the case forever. American got into this situation in part because they were singularly focused on fixing their internal issues, and assumed the outside world would stand by while they did. That wasnt the case, and it very well may not be the case in the future.
American filed for bankruptcy protection in November. Its CEO, Tom Horton, initially said any merger should wait until after American exits bankruptcy protection, but recently the airline said it will study various merger options. A combined American and US Airways would rival United as the worlds largest airline.
Charlotte Douglas International Airport is US Airways busiest hub. The Tempe, Ariz.-based carrier operates more than 600 daily flights from Charlotte Douglas, and has more than 7,000 employees based here. The airline accounts for almost 90 percent of the citys air service.
US Airways has lined up the support of Americans three big unions. Leaders of each were seated at the head table while Parker spoke on Wednesday. Those unions are three of the nine members of the creditors committee that essentially controls the airlines future ownership.
Parker said in Washington hes certain that we will have a unanimous vote in our favor, so long as we have a fair process.
A US Airways-American deal would cap seven years of big airline mergers that began in 2005. That year, America West run by Parker acquired US Airways out of bankruptcy protection. Delta Air Lines Inc.s 2008 purchase of Northwest, and the 2010 creation of United Continental Holdings Inc. from United Airlines and Continental Airlines created the worlds two biggest airlines.
Parker said American doesnt have the hubs to route traffic up and down the East Coast, so it loses business to Delta and United.
Network gaps like this were acceptable a few years ago, when every airline had some gaps, Parker said. But with the breadth and scale of the new United and the new Delta, thats no longer the case. American is steadily losing corporate share to their larger competitors, and they will never be able to gain it back without a comparable network.
American posted a $241 million second-quarter loss on Tuesday because of bankruptcy expenses. Without those costs it would have earned $95 million because of higher fares and the benefits of fare-sharing with British Airways, Iberia and Japan Airlines.
American put out a statement in response to Parkers remarks, saying its review of its options will be a disciplined process guided by the facts and will not be influenced by baseless rhetoric.
In other comments, Parker said:
• He expects the combined airline would be part of the oneworld alliance, which American is in now. Those alliances help airlines work together by selling tickets on multiple airlines on the same transaction, so a traveler can fly from Munich to Philadelphia on Lufthansa and on to Phoenix on US Airways. US Airways is currently in the Star Alliance, but has been overshadowed in Star by United Airlines.
• He does not expect antitrust authorities to require the combined airline to get rid of any routes.
Observer staff writer Ely Portillo contributed.