US Airways

American Airlines-US Airways merger might be necessary, but is it a good match?

American Airlines' (AA) bankruptcy has renewed discussion of the inevitability of an eventual merger with the other single in the room, US Airways. While perhaps expedient, is it a good match? A closer look at the shared dowries is in order.

US airlines’ ancillary revenues continue to grow, but at a slower pace for legacy carriers

The US Department of Transportation (DoT), through the Bureau of Transportation Statistics (BTS), has released second quarter data which provides some interesting numbers for consideration. Looking at the ancillary revenue collected by carriers, we find that the amounts collected continue to grow, but for most legacy airlines at a slower pace. The overall year-on-year total increased only 5%.

However, passengers flying Spirit had a quite different experience and despite its general “no fees” image, Southwest has increased its take from fees by 10% over the year.

US Airways largely rules out further industry consolidation

Just as fervor increases on calls for American Airlines and US Airways to merge, US Airways CEO Doug Parker announced at the carrier's quarterly results that consolidation opportunities had passed. His comments suggest he sees American Airlines and US Airways, the last two US legacy carriers not to engage in industry consolidation, remaining independent and on their own to battle their larger competitors.

US Airways in 68% negative swing on profits as it achieves revenue records

US airlines are providing two lessons for analysts: that this time really is different and the industry can make money despite high fuel prices. Following a host of airlines to profitability, except Southwest and American, US Airways remained profitable despite posting a 68.4% negative swing on profitability.

Indeed, US Airways CEO Doug Parker summed it up nicely when he said: “The average fuel price per gallon is almost exactly the same in 2011 as it was in the industry’s worst year in 2008 when US Airways lost USD800 million and, now, in 2011 we’ve made nearly USD100 million. That major improvement is clearly not due to the improvement in the global economy. It has come from a lot of hard work and a real industry transformation that included consolidation, capacity constraints and cost controls as well as management that cares more about return on capital than about growth and market share.”

Airlines ask investors to help fight proposed US taxes that have detrimental impact

A funny thing happened during this earnings season. They became a platform for aviation policy reform. In a significant departure, airlines took time to ask analysts and investors to help them convince Washington the industry is not only taxed too much but cannot withstand the USD36 billion in new taxes now being proposed in Washington.

The plea was linked to the completion of the industry restructuring that has been under way for the past few years. Indeed, CEO Doug Parker made the point to analysts during yesterday’s earnings call that government policies and taxation are the only thing separating the industry from its real potential as well as its potential to further contribute to the economy. If it could get Washington policies to change, the industry would then be much like any industry, he indicated.

Slots continue to make news in the US, first at New York and change comes to SFO

The US aviation landscape is again being affected by the scarcity of capacity in two of the nation’s important metro areas. Last week the FAA gave its blessing to the slot swap between Delta and US Airways at New York’s LaGuardia and Washington’s Reagan.