New Airline Wants To Take On SWA
What appears to be good news for both US Airways and America
West in their planned merger could end up being bad news for the
entire airline industry, some analysts warned, because the
newly-proposed company will use capacity that might otherwise have
ended up in the boneyard.
"For the industry it makes things tougher because this is
capacity that would have been knocked out the system" if US Airways
had failed to recover from bankruptcy, said Ray Neidl, an analyst
at Calyon Securities in New York, in an interview with Reuters. "If
you have a stronger US Airways then there's going to be more
pressure on Spirit, Delta and AirTran."
Not only would US Airways survive on the $1.5 billion in new
capital it promises to bring to the table. It would actually become
something of a financial powerhouse, according to some
Others on Wall Street remained skeptical, pointing out that the
last big merger to rock the airline industry -- American Airlines'
buyout of TWA -- did very little for the stockholders in either
But executives at Merrill Lynch pointed out that the new entity
would get rid of about 60 aircraft over three years -- seats that
would otherwise keep flying.
No matter how you look
at it, though, the deal will probably be felt the most by Delta,
according to consultant Michael Roach, who was the founding
president of America West. He now runs Roach & Sbarra Airline
Consulting, based in San Francisco.
"Anything that strengthens US Airways in the East is going to be
bad for Delta," he told Reuters.
Other analysts predicted the merger would probably have some
negative impact on AirTran as it found itself head-to-head with the
newly-formed company in several different markets.
But the biggest unknown
would be felt by the most powerful of the low-cost carriers:
Southwest. In his remarks at Thursday night's news conference in
Tempe, AZ, Doug Parker, the America West CEO who will lead the new
entity if it is approved by regulators and the bankruptcy court,
said the combined company would become a nationwide low-cost
carrier with major facilities in direct competition with Southwest