US Airways, American Merger not expected to affect Boston

Flight reductions not likely to be major, analysts say

Combining American and US Airways would probably create the world’s largest carrier.
Stephan Savoia/Associated Press/File
Combining American and US Airways would probably create the world’s largest carrier.

If US Airways succeeds in its attempt to merge with American Airlines to become what could be the world’s biggest airline, it probably would not have a major impact on Boston-area travelers.

The combined airline would carry as many as a quarter of all passengers out of Boston - second only to JetBlue Airways. But since US Airways and American currently compete only on one route out of Boston - to New York - analysts don’t expect a merger to significantly decrease the number of flights the airlines offer out of Logan International Airport.

US Airways is pursuing a takeover of American Airlines, which sought bankruptcy protection in November. Last week, it said it had secured backing from the three main labor unions at American.


In response, American said it would continue to pursue its own restructuring plan.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Some analysts said a combination could lead to higher airfares, but others maintain that having a strong alternative to the nation’s two other dominant airlines - United Airlines, which merged with Continental Airlines in 2010, and Delta Air Lines, which took over Northwest Airlines in 2008 - could help keep ticket prices down in the long run.

The airline industry is struggling as passenger traffic continues to decline while fuel prices gobble up more and more of their operating funds.

Airlines have joined forces to stay solvent. An American-US Airways merger would be the fourth consolidation since 2008, including Southwest Airline’s recent acquisition of AirTran Airways.

American is the only so-called legacy carrier that has not merged with another airline since the Sept. 11, 2001, terror attacks.


US Airways said it had signed agreements on post-merger labor terms with the three unions, which represent 55,000 American Airlines employees.

The Allied Pilots Association, the Association of Professional Flight Attendants, and the Transport Workers Union subsequently said they would support a merger of the two airlines.

On Friday, US Airways’ president, Doug Parker, sent a letter to employees explaining that his plan to take over American would result in far fewer layoffs and create a stronger airline. In Bankruptcy Court, American has proposed a restructuring that would eliminate about 13,000 positions.

“Our intention would be to put our two complementary networks together,’’ Parker wrote, “maintaining both airlines’ existing hubs and aircraft, and create an airline that could compete successfully with United, Delta, and other carriers within our industry.’’

On Monday, American’s chief executive, Thomas Horton, fired back with his own letter to employees, contending that US Airways is trying to “force a merger.’’


“We must be mindful of other parties who don’t have our best interests at heart and who are working their own agendas at our expense,’’ Horton wrote.

US Airways doesn’t have ‘our best interests at heart,’ American’s chief executive says.

JetBlue serves 27 percent of passengers traveling out of Logan. US Airways is the third-largest carrier, at nearly 14 percent and with a daily average of 79 flights; American is fifth, with 32 daily flights, on average, and a 10.7 percent market share.

JetBlue declined to comment on the merger talks, other than to note that it has been growing rapidly in Boston and will maintain its commitment to the market.

US Airways, which itself was acquired in bankruptcy by America West in 2005, has made several failed merger attempts in recent years. It launched a bid for bankrupt Delta Air Lines in 2006 and was in talks to join forces with United in 2010. But its pursuit of American would probably be approved, analysts said.

Currently, operating revenues at American and US Airways are a distant third and fifth, respectively, behind United’s and Delta’s. If US Airways and American don’t merge, said airline analyst Robert Herbst, “United and Delta will just continually beat down on US Airways and American.’’

Adding another strong competitor would help keep service standards up and airfares down, said Herbst, of

“I don’t see very many negatives in any of this,’’ he said.

But a Massachusetts Institute of Technology aviation researcher, William Swelbar, does.

“These are two relatively weak networks,’’ Swelbar said, noting that US Airways and American attract fewer premium customers than do Delta and United. “Is a combination of US Airways and American really going to be a viable competition to Delta and United, who will still have superior networks even if American and US Airways were to combine?’’

Swelbar said mergers make sense in an industry that earns only three-tenths of a penny for every dollar of revenue. But a combined American-US Airways would not dominate any region, he said, suggesting American would be better off creating expanded partnerships with JetBlue, to strengthen its East Coast presence, or with Alaska Airlines, to dominate the West.

“It’s like Ricky Bobby says,’’ said Swelbar, quoting Will Ferrell’s character in the NASCAR movie “Talladega Nights,’’ “if you’re not first, you’re last.’’

Katie Johnston can be reached at Follow her on Twitter @ktkjohnston.