A Quick Note on the US Airways/United Merger Rumors

One quick thought about the US Airways – United merger rumors that we learned about yesterday (and have been hearing about for almost 10 years).

Articles about airline mergers nearly always focus on hub overlap and aircraft overlap.  I’m not suggesting those things matter – they do on some level.  But I think we’ve learned 2 things over the years about airline mergers:

1) Much like drafting a quarterback out of college, there’s been very little success predicting whether an airline merger works before it actually happens.  The Delta/Northwest merger, which took about 2 years to really complete, is probably as successful a merger as you’re going to see in the industry and they had about 217 aircraft types between them, as well as 4 hubs within striking distance of each other.

2) That merger has been successful (or, as I said, as successful as any merger is going to be) because, as US Airways & America West learned the hard way, mergers succeed because they manage the labor issue.  You can sell the old DC-9s.  You can shut down the hub in St. Louis.  But you can’t easily merge pilot seniority lists.  And if the pilots aren’t happy, they can really, really screw everything up.  I don’t mean that in a bad way, it’s just the reality of it:  you have to get labor on your side, then the rest of it will come into place.

And that’s the big hurdle for US Airways/United.  Fine, there are overlapping hubs.  Fine, frequent flyers may not be happy with the US Airways product.  None of that matters, frankly (if you are hub captive, what are you going to do?  And Star Allliance offers a pretty solid set of benefits).  It’s going to come down to whether the unions are happy (it’s a topic for another day whether United could survive without a merger, a prospect that would leave everyone out of a job, which would certainly make the unions unhappy).


  1. On that last sentence — do you feel that UA is in worse shape than US?

  2. Neither is in particularly great shape. United has been trying to merge their way to profitability for 10 years, as has US Airways. That US Airways is the acquirer in this scenario suggests to me that they’re in (somewhat) better shape.