A Fact of Life: Phoenix Would Lose Jobs in USAirways/AMR Merger

PHOENIX -- ( TheStreet) -- A new study said that if US Airways ( LCC) merges with AMR ( AAMRQ.PK), Phoenix could lose thousands of jobs and millions of dollars in tax revenue.

How many jobs and how many millions? The number is unclear. A study done for the North Scottsdale Chamber of Commerce said that US Airways employs 9,239 people in Arizona including about 2,000 in its headquarters, which could be lost. The airline said headquarters employment is only about 750. Spokeswoman Michelle Mohr said the airline's Arizona work force includes about 2,000 non-union jobs, which may explain the discrepancy.

In order to gain support for its effort to merge with AMR, US Airways has said it would retain the larger airline's Fort Worth, Texas, headquarters as well as its name.

Joe Galli, executive director of the North Scottsdale Chamber of Commerce, said he realizes that a merger may or may not occur and that the chamber cannot save every job in the event of a merger. However, he said, "We wanted to put some numbers out there so that people are aware of what impacts could be pending. We're hopeful they keep as much of the headquarters operation in Phoenix as they can.

"This is our hometown airline," Galli said. "Phoenix is the fifth- or sixth-largest city in the country, but we are a very tight knit community. A lot of our identity includes US Airways' presence here -- it probably goes a little bit beyond the bottom line job numbers," he added.

"We lived through a name change" when Phoenix-based America West Airlines merged with US Airways in 2005, Galli said. "We will probably live through another. But the importance of having them here for our economy can't be overstated." He said US Airways is the ninth-largest employer in Arizona.

The study said that if the state was to lose 2,000 jobs, annual state revenue from tax payments would fall by $11.4 million, and annual county and local government revenue would fall by another $9.5 million. Lost employment, given the multiplier effect of the lost jobs, would total 5,305 jobs.

Another variable involves the amount of lost service that could result from a merger creating an airline with hubs in Dallas, Los Angeles and Phoenix. The airline has said no flights would be lost, but the study considered the possibility nonetheless. Some experts suggest that for some flights, connections in Dallas, the second largest single-airline hub in the world with about 750 daily departures, would make more sense than connections in Phoenix.

In Phoenix, US Airways operates 260 daily departures to 74 destinations. Numbers were slightly higher at the time of the study, which said that if 25% of flights were cut, total Arizona employment would fall by 4,643 jobs, including the impact of the multiplier effect, while state tax revenue would fall by $10 million and local government revenue would fall by $8.3 million.

Mohr said US Airways recently signed a five-year lease on its headquarters building with a potential five-year extension. "We intend to maintain our hub and significant corporate presence in Phoenix no matter what happens," she said.

It is not unusual for headquarters jobs to be lost in mergers, nor for people to be upset when that occurs. The Minneapolis Star-Tribune reported in February that about 1,000 Minneapolis jobs were lost as the result of the 2008 merger between Atlanta-based Delta ( DAL) and Minneapolis-based Northwest. But Delta said it still employs 12,500 people in Minnesota.

In 2010, United ( UAL) announced plans to merge with Continental and closed the Continental headquarters, resulting in the move of 1,500 corporate jobs from Houston.

In May, the Houston City Council voted 16-1 to allow Southwest ( LUV) to build an international terminal at Houston Hobby Airport, diminishing United's hub at Houston Bush Intercontinental. The lopsided margin resulted largely from the continuing bitterness over the loss of the headquarters.

In Dallas/Fort Worth, American employs about 24,000 people. That includes about 5,000 in the headquarters and 19,000 at the airport, in area crew bases and in a reservations center.

-- Written by Ted Reed in Charlotte, N.C.

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