Details are emerging on a likely United Airlines-US Airways union. It appears the carrier will be based in Chicago but that US Airways executives Doug Parker and Scott Kirby will lead the management team, reports the Chicago Tribune.
But is a merger a good idea? The consensus among analysts and bloggers is: probably not.
Hubert Horan, a Phoenix-based aviation consultant, thinks that the costs of combining reservation systems and fleet could wipe out much of the potential cost savings.
The last thing you need, especially heading into a recession and with fuel volatility, is to spend $1 billion of cash reserves that are already dwindling … on what would be the most hellaciously complex merger in aviation history. It’s like dropping a gasoline-soaked bomb on six union groups.
Aviation blogger Evan Sparks added his two cents to the imminent merger by quoting the architect of airline deregulation, Alfred Kahn.
We are strongly motivated to let anyone fly wherever they want. But instead of grasping the opportunities we’re offering, this disease, this psychology, is getting abroad that airlines ought to merge.
Even though the merger may make no financial sense, the Tribune suggests United and US Airways may have no choice.
United is projected to suffer the deepest 2008 losses in the industry, an estimated $10.71 per share, at the current oil prices, according to a research report published Friday by analyst Kevin Crissey of UBS Investment Research.
The airline with the second-largest projected loss? US Airways, which Crissey estimates will lose $10.16 per share. Parker also has advocated consolidation and last year failed in an attempted hostile buyout of Delta.
Will a US Airways-United merger work? Perhaps only time will tell.
