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TheStreet Open House

Making the Case for an AMR/US Airways Merger

Stocks in this article: AMR DAL LCC UAL

Also at media day, Andrew Nocella, senior vice president, marketing and planning, spoke about US Airways' strong presence in the East.

"US Airways serves more cities in the east than any other carrier, with above average frequency levels," he said. His charts showed that US Airways serves about 65 "spokes," or smaller cities that connect to hubs, in the East, while Delta serves about 63, United serves about 55 and American serves about 30.

Additionally, US Airways has about 650 daily departures in the East, while Delta has about 700, United has about 440 and American has about 200.

A recent report by JPMorgan (JPM) analyst Jamie Baker makes the same point: AMR is weak in the East, compared to its two rivals, because it cannot gather passengers in small cities. It has neither the aircraft nor the hubs to serve those cities. Baker also described himself as "underwhelmed" by American management's plan to boost revenue by $1 billion annually.

But Virasb Vahidi, American chief commercial officer, has said a planned aircraft order and proposed changes in the pilot contract would enable increased revenue because American could serve new markets with more aircraft types and could boost flying to smaller cities by flying more regional jets. That would reduce its weakness in smaller eastern cities, although, without Charlotte, American would still lack a hub that is well-positioned to serve them.

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