This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

American Needs US Air Merger: Analyst

CHARLOTTE, N.C. ( TheStreet) -- Despite its obvious reluctance, American (AMR) needs a merger with US Airways (LCC) so that it can compete effectively in the transatlantic market, says a veteran airline analyst.

In a recent report, Avondale Partners analyst Bob McAdoo wrote that the value of US Airways' Philadelphia hub as a collector for European traffic has been widely overlooked. In fact, McAdoo said, "by the numbers, US Airways' Philadelphia hub is the most effective collector of traffic out of the north and eastern U.S. to Europe, surpassing the productivity of even Continental's (CAL - Get Report) Newark hub.
US Airways American Airline

"Contrary to numerous analyst and press comments, US Airways' overall presence as an East Coast/transatlantic carrier is not meaningfully different in scope than that of Continental, Delta (DAL - Get Report) or United (UAUA)," wrote McAdoo.

Philadelphia generates more European revenue each day than American's hubs at either New York Kennedy or Chicago O'Hare, and more connecting traffic per European destination that Continental at Newark, he said.

From Philadelphia, US Airways serves 80 domestic cities and 17 European cities. From Washington Dulles, United serves 74 domestic cities and 10 European cities. From Newark, Continental serves 72 domestic cities and 27 European cities. From New York Kennedy, Delta serves 44 domestic cities and 26 European cities. Also from Kennedy, American serves 17 domestic cities and nine European cities.
More Airline News
JetBlue, Southwest Battle for Boston

Of course, one of those nine destinations is London Heathrow; American and partner British Airways dominate this most valuable transatlantic route. But McAdoo said this fact contributes to the false perception that their Oneworld alliance has a strong transatlantic presence. In fact, he said, without Philadelphia, Oneworld trails badly in East Coast transatlantic markets, holding only 50% of the capacity of the Star Alliance and just 60% of the capacity of SkyTeam. Over half of U.S. traffic to Europe originates in the eastern third of the U.S., the area north of the Carolinas and east of Michigan.

"If alliances exist, among other reasons, to offer seamless travel from anywhere in the U.S. to anywhere in Europe, Oneworld is clearly deficient," McAdoo wrote. "However, combining US Airways and American would create a Oneworld North Atlantic network competitive with the Star and SkyTeam offerings.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LCC $0.00 0.00%
CAL $25.21 0.00%
DAL $41.67 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs