Parker Keeps His Promise
A little more than two years ago, low-cost regional carrier America West Airlines decided to enter the merger business and launched a bid for troubled ATA Airlines.
The attempt failed, but it obviously set the stage for bigger things.
Within a year, the America West management team headed by Doug Parker had engineered a combination with US Airways (LCC). Today the same team is still at it, pursuing an effort to merge their new US Airways with Delta Air Lines (DALRQ) and create the world's biggest carrier.
Much has changed since the ATA bid, but one thing is the same -- Parker is still drawn to carriers in bankruptcy because of their ability to reduce expenses, particularly the cost of leasing airplanes, in court. Ironically, a disagreement over lease costs was in part responsible for the collapse of the ATA bid.In its effort to acquire Indianapolis-based ATA, America West was outgunned by powerful Southwest Airlines (LUV), which created a partnership with ATA that enabled it to acquire prized gates at Chicago's Midway Airport. Back then, America West had $2.4 billion in revenue and about $400 million in cash. Now, US Airways has nine-month revenue of $11.5 billion, about $3 billion in cash, another $7.2 billion in financing, and is a powerful force in the airline industry. An airline executive, who asked not to be named but was familiar with the effort, said the failed ATA bid "may have been the first step in saying 'Why can't you take two weak carriers and make one strong one?'
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