Merger signals lift-off for world's biggest airline

 

After about 15 months in bankruptcy protection, American Airlines' parent company, AMR Corporation, yesterday agreed a merger with US Airways in a move that will make it the world's biggest carrier with an equity value of $11 billion.

It's quite some turnaround in fortunes.

In a conference call yesterday, two senior executives from the airlines said the deal would boost competition in the market rather than leading to higher air fares.

The transaction had been well flagged and non-profit group American Antitrust Institute was quick out of the traps to call for an investigation of the merger, arguing it will substantially reduce competition.

It published a study that concluded ticket prices rose by 20 per cent on some key Delta routes after its merger with Northwest and by 30 per cent on several United-Continental routes after their merger.

"This is putting two complementary airlines together and that creates more competition, not less," Scott Kirby, president of US Airways, insisted.

"We only override directly over 12 routes out of more than 900 routes that we've got. I'd also point out that airline fares in general have been going down. Air fares in the US from 2000 till today are down 18 per cent in real terms."

Kirby said the merger would give Irish travellers "more options" when travelling to the US, with the pair having nine hubs between them.

Virasb Vahidi, chief commercial officer of American, confirmed that its new route between Dublin and New York JFK will take off as planned from June 12th.

Why does American want to operate this route given that Aer Lingus and Delta already fly between the two airports?

"We plan the network across the Atlantic jointly with our partners British Airways and Iberia," he said. "As part of a analysis, we did in terms of introducing new routes for the joint business -

JFK-Dublin came on top of that list.

"It's a route that's desired by our high-value customers and corporate customers in New York. We think that, jointly with BA and Iberia, it will add tremendously to the network we have across the Atlantic."

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