Reported by Reuters tonight, Star Alliance member US Airways is forecasting additional airline industry consolidation, however did not go as far as committing to a position on the potential for acquiring its larger rival, American Airlines. Curious which way the Frequent Flyer Programs would go. Does US go to One World and out from under the shadow of United? Or does American come to the Star Alliance? My money is on US Air going to OneWorld. What’s your bet??
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Here’s the excerpt from the Reuters Story Dated 7 December 2011:
US Airways sees room for more airline consolidation as a means to trim capacity and gain pricing power after a protracted downturn, the carrier’s chief financial officer said on Tuesday.
“A key thing in this industry has been consolidation,” Derek Kerr said on a webcast of a Rodman & Renshaw airline conference. “We’ve been a proponent of consolidation since 2005.”
Many airline analysts expect US Airways, formed from a 2005 merger with America West Airlines, to make a bid for its larger bankrupt rival American Airlines. AMR, parent of American Airlines, filed for Chapter 11 last week.
US Airways has not said whether it intends to attempt a merger with AMR, but Kerr said the carrier still promotes consolidation.
“This has been the first step. We’ve talked about this all along,” Kerr said. “Four major mergers since 2005 and possibly room for more as we move forward to make the industry a little bit healthier.”
Kerr also said US Airways’ outlook for unit revenue — revenue per available seat mile — is “staying pretty strong” and that corporate travel bookings are robust.
Earlier on Tuesday, Southwest Airlines chief financial officer Laura Wright told the conference the discount carrier expects “another high-single-digit” rise in unit revenue for December, similar to a rise of 9 percent seen for November.
I think their strategy will depend a lot on what alliance they join. If they were to stay in Star, I can see them shrinking at ORD and LAX to focus on non-Star partner hub cities. If they go oneworld, I doubt they would do a ton of shrinking at the hubs other than the non-profitable flights.
There wouldn’t be much left for Oneworld if AA were to depart. I don’t see how an alliance can function without a major U.S. airline.
It doesn’t seem likely that USAir would want to keep all of AA as it exists today. If USAir were to buy AA, I can see them selling AA’s NY operations and fleet to DL and shrinking NY, and probably shrinking LAX & ORD as well. USAir will think this way to focus on MIA, DFW, CLT. Could even lead to shrinking in PHX.
Wrong year referenced in the post: “Dated 7 December 2012”
It would be awful if US Air left the Star Alliance. The best thing about the US Air Dividend Miles Program (and US Air for that matter) is the ability to fly Thai, Singapore, Luftansa and ANA without any hassles!