Last week, America West Holdings and US Airways announced that they plan to merge to create a nationwide airline that is competitive with low-fare carriers.
“Building upon two complementary networks with similar fleets, closely-aligned labor contracts and two outstanding teams of people, this merger creates the first nationwide full service low-cost airline,” said America West Chairman, President and CEO Doug Parker.
It has been reported that US Airways has invited alternative proposals to it’s merger with America West as a result of all of the negative criticism this merger is getting.
Most of the criticism falls on America West for taking on US Airways which is currently dealing with bankruptcy issues. David Grossman of USA Today goes into detail about most of the potential problems with this merger:
This proposed merger is fraught with problems. For starters there is a clash of cultures old and new. Launched in 1983, America West is a relative newcomer to the industry: US Airways has been around much longer. There is sure to be bad blood with many US Airways employees having far more seniority than those at America West.
Then there is the clash of culture when east meets west. Both carriers are primarily regional airlines serving opposite coasts. There is very little overlap in the airlines’ route structures. This could be a good thing in a merger, and many believe the combination will create a national network that will rival the big guys. But one essential piece is missing: Each carrier lacks a major hub in the heart of the country…
If the merger goes through, the airlines will operate under the US Airways brand under Mr. Parker’s leadership. The merged airline’s 13-member board will be comprised of one member from each of three new equity investment companies, six members from the current America West board, including Parker as chairman, and four members from the current US Airways board, including Lakefield as vice-chairman.
“Through this combination, we are seizing the opportunity to strengthen our business rather than waiting for the industry environment to improve,” said Parker. ” A combined US Airways/America West places the new airline in a position of strength and future growth that neither of us could have achieved on our own.”
“US Airways has a strong franchise and great employees that will be enhanced by America West’s strengths and success in the low-fare, low-cost marketplace,” US Airways President and CEO Bruce Lakefield said.
“That we have secured such an impressive slate of equity investors and partner support in a period of such industry uncertainty is a strong indication of the prospects and enthusiasm for this transaction, added Lakefield. “It has been my objective to ensure the long-term viability of US Airways and the security of our outstanding employees; this merger with America West will accomplish that objective.”
The headquarters of the combined airline will be consolidated into America West’s headquarters in Tempe, Ariz. For regulatory purposes, both airlines will operate under separate operating certificates for a transition period of two to three years, keeping flight crew, maintenance and safety procedures for each airline separate according to a press release.
The merger is subject to approval by the U.S. Bankruptcy Court overseeing US Airways’ pending Chapter 11 case. The closing of the transaction is expected to take place in the fall.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
