Airline merger not expected to hurt BR, N.O.

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Matt York /
Associated Press file photo by Matt York -- A US Airways jet takes off as an American Airlines jet is prepped for takeoff at Sky Harbor International Airport in Phoenix in 2008. The merger of US Airways and American Airlines has given birth to a mega airline with more passengers than any other in the world.

An $11 billion merger of American Airlines and US Airways announced Thursday probably won’t have much effect on the Baton Rouge or New Orleans airports, a Metro Airport official said.

There’s not a lot of overlap between US Airways and American Airline’s flights at either Metro Airport or Louis Armstrong New Orleans International Airport, said Jim Caldwell, Metro Airport’s manager of air service development, marketing and public relations.

The merger will turn American into the world’s biggest airline, with some 6,700 daily flights and annual revenue of roughly $40 billion.

The combination could make the merged company more competitive, Caldwell said. Their biggest competition is Delta Air Lines, with its main hub in Atlanta, and United Airlines for flights headed west.

At Metro Airport, Delta has the largest share of traffic, with United Airlines a close second, Caldwell said. American is third and US Airways is a distant fourth.

“But if you combine US Airways’ and American’s market share, then you’ve got all three carriers at pretty equivalent shares,” Caldwell said.

The merger means that Metro Airport will be serviced by the major airlines and their global alliances — agreements with international partners that allow passengers to travel seamlessly anywhere in the world, Caldwell said.

“I’m glad we’ll have all three global alliances …. You can leave from Baton Rouge … and get literally anywhere in the world … essentially as if you’re on the same carrier,” Caldwell said.

Caldwell said the merger means Metro Airport loses a competitor but the merger partners serve different hubs: US Airways with Charlotte, N.C.; American with Dallas.

At Metro, Delta has 10 round-trip flights per day, nine to Atlanta and one to Memphis; United Airlines, has nine round-trip flights to Houston; American has eight round-trip flights to Dallas; and US Airways has three round-trip flights per day to Charlotte.

The merger is a coup for US Airways CEO Doug Parker Parker, who runs the much-smaller US Airways and has long pursued a deal like this one with the strong belief that airlines would have a better shot at consistent profits if they bulk up through mergers.

The latest deal will mean that the four biggest U.S. airlines are all the product of mergers that began in 2008. Since then, Delta gobbled up Northwest, United absorbed Continental and Southwest bought AirTran Airways. If this latest merger goes through, American, United, Delta and Southwest will control about three-quarters of U.S. airline traffic.

Those deals bring benefits, but they also show that putting together two airlines smoothly is not easy.

Now Parker, the soon-to-be CEO of the new American Airlines, has to make it work. Planes need painting. Frequent flier programs have to be combined. And the new airline will still be weak in Asia and need to win back business travelers who have been drifting away to other airlines.

Some of the work on the latest combination has already been done. Pilots from both airlines have agreed to the outlines of a deal that should make it much easier to get a final, joint contract. And Parker is inclined to use American’s computer systems such as those that track reservations and passenger information, he said on a conference call. He said past mergers have shown that it’s easier to use the bigger airline’s technology, because then fewer people at the smaller airline need to learn it.

Noting those factors, JP Morgan analyst Jamie Baker predicted a “relatively smooth” transition.

The combined carrier is going to be called American Airlines and be based in Fort Worth. The deal is expected to close by the end of September, as part of American’s emergence from Chapter 11 protection.

Even after that, travelers on American and US Airways won’t notice immediate changes.

It likely will be months before the frequent-flier programs are combined and years before the two airlines are fully integrated.

Parker sought a merger almost as soon as American parent AMR Corp. filed for bankruptcy protection in November 2011.

As Parker pushed ahead, creditors forced AMR’s management to consider the value of a merger compared with a plan for an independent American. Eventually they concluded that the best return for stakeholders, and the best chance to compete with bigger rivals United Airlines and Delta Air Lines, came from a merger.

The rapid consolidation of the industry has allowed the surviving airlines to offer bigger route networks that appeal to high-paying business travelers.

And it has allowed them to limit the supply of seats, which helps prop up fares and airline profits.

That concerns some consumer advocates, but Parker sought to assure travelers that the merger helps them too — by creating a bigger rival to United and Delta.

“There are two very large airlines right now and this creates a third,” Parker said in an interview. “It provides good competition to those two.”

Most airline mergers have resulted in a reduction of flights and shrinkage at some hubs, but Parker said this deal will be different because US Airways and American overlap on just 12 routes.

He said the new airline will keep all of American’s hubs — Dallas-Fort Worth, Chicago, Miami, New York and Los Angeles — and those of US Airways, in Phoenix, Charlotte and Philadelphia.

Many airline mergers have resulted in some hubs being downgraded, as happened to Cincinnati after Delta bought Northwest.

Advocate business writer Ted Griggs and Associated Press Airline writers Joshua Freed and David Koenig contributed to this report.