The Deal: Stormy Skies Ahead for American, US Airways
US Airways, meanwhile, has labor issues of its own, with its pilots still operating under two separate contracts stemming from a 2005 merger between US Air and America West Holdings Inc. The AMR deal was seen as a catalyst for resolving festering labor problems inside the airline.
The company has actually benefited financially from keeping workers on those outdated contracts, and can argue that its smaller size and weak network relative to United, Delta, American and even Southwest Airlines (LUV) mandates lower pay rates. But labor sources said Wednesday they believe it is time for raises with or without a deal, calling into question how long the status quo could be maintained.
US Airways' well-regarded management will have to pivot carefully to avoid an identity crisis at the airline, which risks being squeezed in between larger international airlines that primarily court business travelers and discounters such as Southwest that haul a good portion of the nation's domestic tourists.
The airline without an American Airlines deal could seek to gain scale via a merger with a smaller carrier that the DOJ might find more palatable, or could be forced to further streamline its operations and focus on niches where it can be profitable."The team at US Airways has done an admirable job over the years keeping the airline relevant, but that can only go on for so long," an industry consultant said Wednesday. "Absent this obvious path for growth, they have some difficult decisions to make." -- Written by Lou Whiteman in New York
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