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Is US Airways Trying to Merge with Delta?

Jul 31st, 2006 | By

A number of news reports are noting that US Airways’ CEO approached Delta this summer about a possible merger.  Delta’s representatives say that they are not interested in a merger but, given the profitability of the recently merged US Airways, people are getting excited about the possibility of airline mergers again.  This is insanity, as US Airways is an outlier in a sea of failed mergers.  Could a merged Northwest and Delta be successful?  Or a merged United and Delta?  Uh, doubtful.  But we’ll likely see a crazy merger in the next year as the market gets excited about consolidation.

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  1. The USAir thing is a short-term - and a short-lived - effect. In bankruptcy, they *slashed* capacity, just as the economy and travel was roaring back. Supply crunch + high demand = profits. They slashed it so far, SWA, AirTran, JetBlue and others haven’t had time to receive enough new planes to fill in behind them. But it’s just a matter of time. And to add to their troubles, the pilots are already on record as wanting “their fair share of the profits”. They will be hard negotiators and raise labor rates just as the real LCCs start moving in force into their hubs.

    This sounds to me like some sort of hedge fund pump and dump: buy in, slash capacity, jump profits, boost the stock, and bail before the whole edifice keels over.

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