Crunch Time for American Airlines – To Merge or Not to Merge

Will American Airlines emerge from bankruptcy as a stand-alone carrier or do what its pilots have been urging and merge with rival US Airways? As The Dallas Morning News reports, American’s CEO told employees they (and the rest of us, presumably) will find out in “a matter of weeks.”

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Merger Likely Means Higher Airfares

Another report cites next week’s board meeting of American Airlines executives saying it could “provide clues” as to which way the airline will jump. However, a final decision is not seen likely until the latter part of this month. Air travel analyst Rick Seaney went on record at the start of the year, saying he saw the odds of an American/US Airways merger rising to nearly 70%.

This week, Seaney said if the merger gets the go-ahead, it likely will mean higher ticket prices. “After legacy airline mergers, we typically see capacity cuts which are likely give airlines more pricing power,” noted Seaney. “The bottom line is prices will go up long-range and capacity will be cut, if an AA-US Airways partnership follows the lead of other mega-mergers.”

See Other Air Travel Predictions for 2013

Recent Mergers in the News

American is the last of the legacy carriers to undergo bankruptcy restructuring and, perhaps, the latest to jump on the merger bandwagon. In the last decade alone, mergers by venerable old airline names have been the order of the day: Delta joined Northwest (and was seen early on during American’s bankruptcy proceedings as a possible merger candidate), United partnered with Continental, and now Southwest is finalizing its acquisition of AirTran.

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Published: January 7, 2013