US Airways CEO Doug Parker today reiterated the carrier's pro-consolidation stance, adding that even if the current wave of merger talks results in a deal between United Airlines and Continental Airlines, the "fragmented" domestic U.S. airline industry still would necessitate further consolidation.
US Airways last week said it halted talks with United Airlines
(BTNonline, April 22), but Parker during the carrier's first-quarter earnings call today said he was still a believer in the consolidation concept.
"It reduces fragmentation and creates efficiencies that allow the industry to better withstand economic downturns," Parker said. "That's good for all airlines, whether we all participate in consolidation or not. As it relates to US Airways, all things equal, we would prefer to participate in consolidation rather than not. We've been very open about that point and aggressive in our actions. That does not mean that we need to participate."
Recounting the carrier's merger with America West in 2005 and its attempted takeover of Delta Air Lines in 2007, Parker said the US Airways' latest discussions with United "may have helped motivate Continental to finally agree to merge with United. If that happens, we'll be down to four large hub-and-spoke carriers. Even with those mergers, our industry is still an overly fragmented group. However, it's a lot better than it was five years ago, and as a result, our industry will be more stable."
Neither Continental nor United have publicly acknowledged merger talks. Noting the rumors that have swirled around airline mergers in recent weeks, pro-consolidation United Airlines CEO Glenn Tilton today during United's first-quarter earnings call said, "At this time we are thoughtfully considering our options in that regard," adding that the carrier "will not comment any further on this subject, unless and until we have something to announce to you."
Continental president and CEO Jeff Smisek during the carrier's first-quarter earnings call last week also would not comment on what he called "recent press speculation concerning potential consolidation in our industry." Still, he told analysts and media, "As you would expect of a responsible management team, we are examining Continental's options and will take whatever action we deem to be in the best interest of our co-workers, stockholders, customers and the communities we serve. Neither I nor my colleagues will be commenting any further on consolidation matters at this time."
Though some transatlantic carriers have found antitrust-immune joint ventures to serve as adequate surrogates for real merger activity
(BTNonline, Jan. 25), US Airways president Scott Kirby today said the carrier has no immediate fix on joining the fray or deepening its relationship with its Star Alliance partners.
"There certainly is potential for greater cooperation with both United and Continental," Kirby said. "United and Continental have a deeper relationship than we have with either one of those. We could move along a number of paths to get there, even going so far as to be in the ATI. I don't expect anything like that to happen imminently. Especially with what's going on with their potential merger, that would make it more complex, but there are opportunities to do more. I just don't know when we'll be able to realize those opportunities."