American-US Airways merger could strengthen Miami airport hub
Friday, American and US Airways announced they formally are discussing a long-rumored merger. Meanwhile, British Airways may also be seeking a deal with Miami’s largest airline.
08/31/2012 12:00 AM
09/01/2012 11:02 AM
As American Airlines begins merger talks with US Airways, the deal has the potential to remake the aviation industry. But South Florida’s airports shouldn’t see too much of a difference in a post-merger world.
That’s the conclusion of aviation experts who see American’s Latin American operations in Miami as so dominant that US Airways would be almost certain to keep the American strategy of using Miami International Airport as the hub between North and South America.
In fact, Miami could gain flights if the new company opted to move US Airways’ smaller Latin American operation from Charlotte, N.C., to MIA, said Bob Herbst, founder of airlinefinancials.com and an aviation consultant in St. Louis.
“There’s no doubt in my mind whatsoever you’d see growth in the Miami market,’’ Herbst said.
The long-rumored scenario moved one step closer to reality Friday when both sides announced they would be exchanging confidential information as talks begin on a potential merger.“It does not mean we are merging — it simply means we have agreed to work together to discuss and analyze a potential merger,” US Airways CEO Doug Parker said in a letter to employees Friday, according to The Associated Press.
And it is not the only possibility. Also on Friday, The Associated Press reported American Airlines parent AMR entered a similar agreement with British Airways, which wants to buy a stake in American. American did not comment on the potential British Airways sale, but industry observers noted it could be a sign that AMR can raise the money it needs to exit Chapter 11 without selling outright to a competitor.
Combined, American and US Airways would be the largest carrier in the United States, passing Delta, the current leader. Worldwide, the combined carrier would also be No. 1, ahead of United Continental.
A merger between American and US Airways would almost certainly leave the American brand standing. As the country’s third-largest carrier, American enjoys stronger brand recognition and reach than No. 5 US Airways, Herbst and others said. That means downtown Miami’s AmericanAirlines Arena wouldn’t need a name change post-merger, provided the deal survives the bankruptcy process.
Already, American has been trimming staff at MIA as it cuts expenses during the bankruptcy process. In July, it announced 63 layoffs at MIA that would start in October. The airline is asking a bankruptcy judge to cancel its contract with pilots as part of a broader reworking of agreements with all employee groups at AMR.
American is one of Miami-Dade’s largest private employers, with about 9,000 workers. While accounting for more than 75 percent of flights at MIA, American and its American Eagle subsidiary are not large presences at Fort Lauderdale-Hollywood International Airport. US Airways is the third-largest carrier at MIA and the fifth-largest at FLL, according to the latest federal statistics.
With American such a dominant force in Miami, it’s unlikely management would try to change that after a merger by shifting flights to areas where US Airways is strong, said Stuart Klaskin, a Miami-area aviation consultant.
“For us, it’s not a big deal,’’ said Klaskin, CEO of Jetstream Aviation Capital in Coconut Grove. “American would retain its mega-hub in Miami. There would be a little bit more fights.”
US Airways has virtually no passengers living in the Charlotte area and flying to Latin America and the Caribbean, said Herbst, of airlinefinancials.com. Instead, the airline uses its Charlotte hub as a feeder for flights around the country, funneling the passengers into southbound international flights.
Having those feeder flights fly a bit more south to MIA for Latin American routes would be more efficient, particularly with so many South Florida residents purchasing flights to the region.” They can save money by moving into Miami,’’ Herbst said. “They can feed [the Latin American routes] better out of Miami.”
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