US Airways CEO: Just Give Us a Fair Shot at AMR Merger
CHARLOTTE, N.C. (TheStreet) -- US Airways (LCC) CEO Doug Parker said he awaits the time, rapidly approaching, when AMR (AAMRQ.PK) will begin to consider strategic alternatives to emerging independently from bankruptcy.
The bankruptcy court will be "open to consider all strategic alternatives AMR may have or that creditors will bring forward," said Parker, speaking at US Airways' annual meeting in New York. "That's all we're asking for: A level playing field, a chance to show our alternative against any others." The time will come in the next few months, once AMR has managed to arrive at new labor contracts.
During a 26-minute annual meeting that took place in the midtown New York offices of a New York law firm that advises US Airways on business matters, Parker was the only person who spoke. Not a single shareholder asked a question. Attendees included the leaders of American's three biggest unions, which have about 55,000 members. Parker welcomed them, saying "they are representing their constituents very well (and) doing what they are supposed to do, (hiring) world class advisers" to assess the US Airways effort to merge with AMR.
These assessments have come out in US Airways' favor.Parker reiterated the US Airways case, which is that in all three major regions of the U.S. - East, West, and mid-section, American badly trails its competitors in revenue: It is fifth in the East and fourth in the West and the mid-section. But combined with US Airways, the new American would be first in the East and mid-section and third in the West. American had far better positions in 2006, but "they sat out consolidation," Parker said, "Now, in a smaller industry, they are farther down the chain. Bankruptcy can do a lot of things for companies, but it cannot fix this." He said US Airways has figured out that the way to make money in the airline business is to fly into markets where you are the No. 1 carrier. For this reason, 99% of all US Airways flights serve Charlotte, Philadelphia, Phoenix and Washington Reagan National. AMR, he said, does not seem to have reached this conclusion. Rather, he said, "They have announced they will grow in markets where they are the weakest, not the strongest." Additionally, he said, AMR "is not getting its costs in line with its revenue generating capabilities."
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