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American West and US Airways in Merger Talks

It looks like the rumors about an America West and US Airways linkup may be true after all.  Just about everyone is reporting that the two carriers are in advanced talks to squish together their operations.  The NY Times suggests that the merger is a result of widespread calls for consolidation in the industry as a way of reducing capacity, but this will do nothing of the sort.  There’s virtually no overlap between the two, meaning that 1 airline on the cusp of success and one airline that hasn’t done anything right in quite a while will somehow be expected to succeed.  I’m reminded of an old Simpsons bit where Troy McClure mentioned that he was in an infomercial called Smoke Yourself Thin.  Merge yourself profitable.  I’m not a fan of this move at all, though it would’ve made more sense if America West were not itself struggling.  As we saw with the United/US Airways debacle, at least one of the companies has to be stable.  America West has a great future ahead of it, but it must remain committed to fixing its core businesses.  Trying to figure out what to do with US Airways’ less-than-optimal business (Southwest’s invasion into Philly and Pittsburgh, and JetBlue’s introduction of an East Coast Shuttle), will remove the focus from their Phoenix and Vegas operations.  America West is so close to success…I fear this is 1 step forward and 12 steps back.

In related news, America West surprisingly posted a profit for the 1st quarter (though without special items, it was still a loss).

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