It appears the US Airways/America West deal could be just days away, though a number of obstacles still remain (financing, obviously, but also the report I linked to suggests that Southwest may swoop in and bid for US Airways’ assets. To that I say, "good luck with all that.") Regardless, since it appears that this merger may actually happen, I thought I’d pass along my meaningless thoughts about what this merger could mean for the industry.
It would clearly boost America West’s presence in the east, which is something that airline has tried to do unsuccessfully through its now-abandoned Columbus hub. Unfortunately for America West, it would get US Airways’ Philadelphia hub (now under siege by Southwest), its Pittsburgh hub (now under siege by Southwest), and Charlotte hub (primarily connection traffic, and now being attacked by discounters). I don’t imagine there is a single airline out there quaking in their proverbial boots over a strengthened presence at any of these hubs. The Shuttle business is a prize, but with JetBlue set to enter the market next year, even that’s not as valuable as it once was.
Now, America West would probably respond by saying that it has a better cost structure and better pricing strategy than US Airways–and that may be true–but is it enough to overcome the massive human resource issues around combining the company? And don’t be fooled when they make the announcement about this merger and they start talking about cost savings from the merged companies; these savings rarely materialize, and the costs associated with achieving these savings are significant. No one on Wall Street likes this merger, and it’s clear why.