America West, US Airways Merge
US Airways and America West Airlines completed their merger Tuesday, creating the new US Airways that plans to mix low-cost efficiency with the reach and service of the biggest carriers.
“Today we start a new chapter in aviation history,” said Douglas Parker, the America West chief executive who will lead the fifth-biggest domestic carrier by passenger volume.
The new US Airways faces hurdles, including a poor industry record for mergers, high fuel prices and the challenge of combining thousands of unionized pilots, flight attendants and mechanics into one workforce.
It is the first big airline merger since American Airlines absorbed TWA in 2001, and the most dramatic in a series of moves by airlines to survive the worst-ever industry downturn that was accelerated by the Sept. 11 terrorist attacks.
The new US Airways will employ 40,000 people and serve more than 225 destinations, including Europe, the Caribbean, Mexico, Canada and, down the road, Hawaii. US Airways will be based in Tempe, Ariz. -- headquarters of America West -- and operate primary hubs in Phoenix, Philadelphia and Charlotte, N.C. The old US Airways will clear out of its Arlington, Va., headquarters in the coming weeks but will continue to dominate Washington’s Ronald Reagan National Airport.
It could take up to 24 months to merge operating certificates, which means US Airways and America West flight crews will work separately until that process is completed. The first America West plane to carry the US Airways logo will fly in early 2006. America West will operate the first new flight, service to Hawaii, in the coming months.
“The real excitement starts now as they gradually merge two operations. They’ve got the two-year window but it will be a delicate act,” said Joseph Schwieterman, a former United Airlines official and transportation expert at Chicago’s DePaul University. “US Airways employees especially have been promised better times are ahead before only to be disappointed.”
The deal, valued at more than $1.5 billion, lifts old US Airways out of bankruptcy after a yearlong restructuring. It also tests the leadership and vision of Parker, a rising industry star whose decision last spring to embrace a failing and much bigger US Airways was questioned by many industry insiders.
The carrier launches service with three big competitors cutting costs and retooling their operations in bankruptcy -- United Airlines, Delta Air Lines and Northwest Airlines.
To compete, US Airways will employ a new-look hybrid business model that will try to combine the operating efficiency of budget rivals and amenities that many business and other premium paying travelers expect.
The merged carrier will try to leverage US Airways’ presence in the East, directly taking on Delta and Southwest Airlines, and America West’s strength in the West in another challenge to Southwest.
Looking over Parker’s shoulder are a handful of private investors who chipped in $565 million and hold a controlling interest in the company. America West shareholders and the federal agency holding $1 billion in loan guarantees for both companies also have measurable stakes for the moment.
In their first day of trading, shares of the new US Airways closed at $19.30.
