Don't Buy Those JetBlue Merger Rumors

The thought moved Southwest's stock and came up on the earnings call, but there was no indication that the Dallas-based low-fare carrier has any interest in a deal.

Two weeks later, Raymond James analyst James Parker wrote that Frontier(FRNT - Cramer's Take - Stockpickr) could be acquired by another low-cost carrier. He noted that both its Denver hub and its Airbus fleet are attractive, and he mentioned several possible buyers.

Still, he said an acquisition "is not highly probable," even as he upgraded the stock. Wall Street heard what it wanted to hear, and the stock price rose.

The fact is that consolidation has two big supporters in the airline industry. One is Doug Parker, CEO of US Airways(LCC - Cramer's Take - Stockpickr). He failed to push through a hostile merger with Delta, however, and he's now up to his eyeballs in trying to complete the 2005 combination of the old US Airways and America West.

Operationally, it's not going well. A reservations systems merger faltered, causing the carrier to indefinitely delay a move to a single operating certificate that had been planned for June. Then, early this month came an arbitrator's ruling on merging pilot seniority lists. The ruling, which favors younger America West pilots over older US Airways pilots, has left many in the latter group deeply dispirited.

Parker didn't make the decision, but he must deal with the consequences, which could be unpleasant if pilots act to stretch out flight times or turn down extra flying. The situation is just another indication of how messy mergers can be, even though in this case the union probably saved US Airways from extinction.