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American-us Air Merger Will Be Challenging

By Author: Steve Robinson
Total Articles: 468

Cheap fares, particularly cheap airplane tickets, cheap vacation packages, and discount travel packages may be positively impacted by the merger of American Airlines and US Airlines given that the future viability of either airline alone is a serious question.

The integration of the two airlines will take years to complete given all of the labor, technological and logistical issues to work through. If the merger of United and Continental is any indication it will be a far from easy task.

The most critical step will include integrating US Airways’ and American Airlines’ pilots, flight attendants and other labor groups.

Fortunately the pilots unions at American and US Airways have made meaningful progress towards agreeing to how a merger would impact their pilots. Making the situation more difficult is that US Airways today has two distinct pilot groups as a result of the 2005 AmericaWest-US Airways merger. True integration remains elusive more than seven years after that acquisition. Upset employees can negatively impact a merger for years.

The Continental-United merger is a perfect example of what not to do. In March of 2012 United moved its reservations system over to HP’s SHARES platform, which had been handling Continental for years. Four months later United’s on time arrival rate was barely above 64 percent as problems continued with the reservations system transition.

The problems have been so serious that United’s CEO recently felt the need to make a public plea to business travelers who had abandoned the airline to return.

A botched merger risks alienating an airlines most important customers and can seriously negatively impact the bottom line for an extended period of time.

Not all airline mergers have been plagued by problems as evidenced by the Delta-Northwest merger. Delta did an excellent job of retaining key people from Northwest and sharing best practices and procedures across both airlines.

Continental controlled the United-Continental merger and was dismissive of much of what United was doing, including its Economy Plus seats, which the merged airline ultimately adopted. A great deal of arrogance was observed by United employees on the part of Continental Airlines.

While American Airlines is the much larger of the two airlines, US Airways has been the more profitable and scrappy carrier. US Airways CEO and President are expected to head the new merged airline. American Airlines current CEO is expected to become the chairman of the new airline.

For this merger to be successful the management of the new company would be smart to combine the best of US Airways, including its skill in turning a profit, while taking advantage of American’s superior attributes, including technology infrastructure and marketing prowess.

Experts believe that the merger of the two airlines could take as much as four years to complete after the transaction closes. American’s mergers with Reno Air in 1999 and TWA in 2001 did not go smoothly. Maybe with US Airways in the driver’s seat things can go differently this time.

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