US Airways: Merger Probability Is High
CHARLOTTE, N.C. (TheStreet) -- A merger between US Airways (LCC) and one of the Big Three airlines "is a pretty high probability for the end game" of major airline consolidation, while the chance of merging with a smaller carrier is near zero, said US Airways president Scott Kirby at a May 27 meeting with pilots in Charlotte.
The rationale, he said, is that if regulators approve the planned merger between United and Continental, the combined carrier would have a 22% share of the domestic market -- the same percentage that Delta currently holds, while American has an 18% share.
"None of those are anywhere close to dominant market shares," said Kirby. "We'll be about 8%. We could merge with any one of those [three]. At most, you take Delta or United up to 30%. That still leaves a very competitive vibrant industry and one of the industries that's most competitive today."As for a merger with a smaller carrier or a low-cost carrier, Kirby ticked off the reasons why it won't happen. Regarding JetBlue (JBLU), he said: "[It] is profitable today or works today because they have much lower costs than us, which is mostly a seniority issue. Put our cost structure on JetBlue and they lose a ton of money."
|More on US Airways American Needs US Airways Merger|
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV