AVIATION | American Airlines and US Airways

American Airlines CEO: Merger means more Miami business

 

hsampson@MiamiHerald.com

The longstanding uncertainty over the future of bankrupt American Airlines, Miami’s largest carrier and one of the top private employers in the county, was finally resolved with Thursday morning’s announcement of a merger with US Airways.

But a new question emerged from passengers weary of poor customer service as leaders of the two companies announced plans to form the world’s largest air carrier: Will the new giant airline make flying any less of a drag?

Experts and airline officials say there are many positives, especially in South Florida: If approved by a bankruptcy judge and anti-trust regulators, the merged airline will offer more destinations around the world, compete better with the powerful United and Delta carriers and allow American to shed the labor tensions that have long proved troublesome.

“They’ll have no excuse for not improving,” said George Hobica, founder of Airfarewatchdog.com. “They will be more profitable; the worst is behind them in terms of employee relations.”

In an interview Thursday, American Airlines CEO Tom Horton — who had initially resisted overtures from US Airways — talked up the benefits of the $11 billion deal.

“What it means for our customers is a bigger, broader network with more opportunities to get more places easily, and obviously a more financially strong, powerful American Airlines,” said Horton, who briefly will become chairman of the merged airline’s board. South Floridians will have greater access via American to Charlotte and Philadelphia, now dominated by US Airways, and to cities throughout the northeast.

“All of that taken together means that we will be stronger, have more propensity for growth than we already would have, particularly in a region that is growing.”

He highlighted Miami as a region with significant promise for the new airline, calling the hub and the Latin American and Caribbean operation “the best airline franchise in the world.”

“I would expect that the newer, bigger, stronger American will only mean more business through Miami,” he said. “Fortunately for us, Latin America is a place we see extraordinary growth potential — and we’re going to capitalize on it.”

Tourism and business leaders in Miami said they were heartened by Thursday’s announcement.

“It just takes away the angst, it takes away the uncertainty, it allows for planning,” said Frank Nero, president and CEO of the Beacon Council. He said airlift in and out of Miami is one element that the council, Miami-Dade’s economic development partnership, markets to businesses.

American carries nearly 70 percent of passengers at Miami International Airport, making its health crucial to the important tourism industry.

Said William Talbert III, president and CEO of the Greater Miami Convention & Visitors Bureau. “For Miami, it’s only a positive.”

But not everyone is so optimistic.

“[Service] will probably get worse, particularly in Miami,” predicted Miami resident Richard McCormick, replying to a query from the Public Insight Network. “When you have, essentially, a captive clientele, why be nice to the passengers?”

In the most recent Airline Quality Rating, which ranks airlines according to performance, US Airways was in eighth place, American was No. 10, and regional carrier American Eagle brought up the rear in fifteenth place.

George Hoffer, transportation economist at the University of Richmond, said the improvement customers could expect is better service in mid-sized cities — “not the smiley glad-you’re-aboard stuff, but when there’s mechanical or weather [issues], they will have more options.”

In Thursday’s interview, Horton said the carrier has been ordering new planes and working to improve the passenger experience. American and parent company AMR filed for bankruptcy protection in November 2011 and have since revealed several changes to the fleet and operations as it restructures.

Chris Sloan, who runs the airline news website Airchive.com, said he expects US Airways to bring its standards up to the new levels that American has reached.

“American has set a real flag in the ground: relaunched domestic product, major service enhancements in terms of WiFi, new seating,” said Sloan, producer of the Travel Channel series Airport 24/7: Miami. “Coach is always going to be coach, but certainly they’ve made a lot of enhance- ments.”

The new airline will have some 6,700 daily flights and annual revenue of roughly $40 billion. US Airways CEO Doug Parker, who started pursuing the deal after American filed for bankruptcy, will be CEO of the new airline; after Horton’s departure, he will become chairman as well.

The deal is expected to close by the end of September, as part of American’s emergence from Chapter 11 protection. No major hurdles are expected. Pilots from both airlines have agreed to the outlines of a deal that should make it much easier to get a final, joint contract. A group of unsecured creditors has already agreed to terms.

Some travelers interviewed at Miami International Airport Thursday worried about their own wallets in light of the deal.

“It’s probably going to hurt the consumer, but it helps the two airlines because they’re falling farther and farther behind Delta and United,” said Bill Naumes, a retired business professor from New Hampshire who was flying on American. “There are going to be fewer choices, so I think the prices are going to go up.”

But Hobica said that with newer, more fuel-efficient jets, he doesn’t anticipate fare hikes.

“I don’t see the need to raise fares,” he said. “If they do, people will just stay home or drive.”

Miami Herald staff writers Jane Wooldridge and Maria LaMagna contributed to this report, which was supplemented with information from the Associated Press.

This article also includes comments from the Public Insight Network, an online community of people who have agreed to share their opinions with The Miami Herald. Sign up by going to MiamiHerald.com/Insight.

Read more Public Insight Network stories from the Miami Herald

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