US Airways Calls for Consolidation

US Airways (LLC) is calling for consolidation in the market.

CEO Doug Parker said during the company's annual meeting that the airline industry needs to get much smaller to stay in the air and swing back to profit.

The merger of Delta Air Lines and Northwest Airlines ( NWA) was a step in the right direction. But the consolidated company holds less than one-quarter of the U.S. market, leaving room for more mergers, Parker said.

But where will US Airways place if the industry shrinks?

United Airlines ( UAUA) passed on a deal last year to combine with US Airways, but the deal is not completely off the table.

During the meeting, Parker also reiterated US Airways' goal to earn $400 million to $500 million this year by charging for extras such as checked bags and choice seating. These additional fees are permanent and have helped offset steep declines last year from higher fuel prices and this year's turn in the economy.

Parker says the fees are a win-win situation. While additional charges reduced the number of checked bags by 20%, it allowed baggage-handling systems to operate more efficiently. (We'd call it a win-win-lose; you are, after all, now paying for something that used to be free.) Data released by the Transportation Department on Tuesday showed nearly 80% of US Airways nonstop flights were on time in April, making the carrier ninth of 19 airlines reporting those results.

Shares of US Airways tumbled 4% to $2.64 in afternoon trading.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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