US Airways Merger Can’t Fix American Airlines Problems

American Airlines 737-800 Landing at SXM

American 737-800 Landing at St Maarten (SXM) Princess Juliana Airport over Beach.

AMR Requests Bankruptcy Court Extension

AMR Corporation, the parent company of American Airlines and American Eagle, remains in Chapter 11 Bankruptcy protection and has asked the court for an additional six weeks to finish their bankruptcy-restructuring plan. The best outcome for American Airlines, their employees, and consumers is to exit bankruptcy as a stand-alone airline.

The court will rule on the extension request on December 19, the fourth extension since filing for Chapter 11 Bankruptcy Protection. AMR Corporation initially filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York on November 29, 2011.

At the moment, the airline is facing labor problems and their aircraft fleet is one of the oldest in the US, with a significant number of McDonnell Douglas “Super-80” aircraft, the MD-82 and the longer range MD-83. An old fleet isn’t bad in itself with proper maintenance, but the planes are fuel-hogs compared to the new Boeing 737-800 aircraft the airline is taking delivery of.

The existing environment with high fuel costs has put a further strain on American. The airline decided to look at long-term solutions and engaged in a fleet renewal program. American has Boeing 737-800 aircraft on order along with fuel efficient Airbus A319 and Airbus A321 to phase out the “Super-80”. The Airbus A319/A321 are scheduled for initial delivery in 2013. The single aisle Airbus jets will provide a 35 percent reduction in fuel cost per seat versus the MD-80 and a 12 percent and 15 percent fuel cost reduction per seat, respectively, versus the 757 and 767-200.

American also has 42 Boeing 787 Dreamliner aircraft on order with first delivery expected in 2014. The new, fuel efficient aircraft will lower American’s operating costs.

Problems between pilots and mechanics reached the point where American had to trim their flight schedules. The embarrassing episode of “seats gone wild” on their Boeing 757-200 fleet didn’t help.

The pilots union is upset with a new contract forced upon them in re-organization, but the airline and pilots are in negotiations. The mechanics union is upset with the outsourcing of maintenance work to 3rd parties, many located in Latin America and Asia. Previously, American Airlines conducted 100% of their maintenance in-house.

American is the only legacy carrier that has stayed out of bankruptcy court, until now. As American stayed away, the other legacy carriers made the trip, some more than once, to cut costs and dump pensions.

US Airways will not fix American Airlines

If the two carriers were to merge, there would be no real benefit to American, it is Doug Parker and the shareholders at US Airways with everything to gain.

American has an extensive route network which includes profitable trans-Pacific flights plus they’re the dominant US carrier to the emerging markets to Central and South America. US Airways was granted flight rights to China in 2007, a Philadelphia (PHL) to Beijing (PEK) route to be specific, but the airline never launched the service. US Airways lacked the necessary lift to operate the route.

Instead, US Airways has focused primarily on Europe from their Philadelphia (PHL) and Charlotte (CLT) hubs. Aside from Europe, Canada, the Caribbean, and Mexico, they’re mostly a domestic carrier.

A merger between American and US Airways would provide US Airways with long-range aircraft including the Boeing 777 and a substantial international network.

Short of a merger, US Airways will either have to wait five more years to receive the Airbus A350 XWB, which has the range for Asia, operate from the west coast using their A330’s, or temporarily lease an aircraft with sufficient range.

Any merger between US Airways and American will hurt consumers

We’ve already seen too much consolidation in the US airline industry. First US Airways and America West merged, then American scooped up much of TWA, next it was Delta and Northwest Airlines, and most recently, United and Continental. When it comes to budget airlines, Southwest is currently in the process of merging AirTran into their network.

Several of the above mergers were a disaster when it came to customer service. I still recall the mess Delta had at New York’s JFK airport during the Northwest merger.

The mergers cut back on competition, one carrier at a time, with a high short-term focus. As carriers with once great service get cut out of the market, customer service nose-dives, routes become thinner, hubs are eliminated, and consumers pay more.

It’s in the best interest for most that American Airlines exits bankruptcy as a stand-alone carrier. - Best Rate Gauranteed.

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