The computer glitch last Thursday was short, and luckily did not overly inconvenience travelers at Phoenix Sky Harbor International Airport. There was also some impact from the bump on American Airlines flights in Chicago, Miami, and Dallas-Fort Worth airports.
Passengers are hopeful and cautious about the merger of US Airways and American Airlines; hopeful all will go well, and cautious to avoid unnecessary delays or problems.
Chief pilot Tate Willworth, for Leading Edge Aviation, who flies with US Airways/American often for work, said that his luggage is lost about 3 out of 5 times that he flies with them.
He said he is hoping that the merger will improve the running of the company, but he also added:
“I see it like a pack of sled dogs, if you’re not in the lead it’s a bad view.”
The two major airline companies merged in December 2013. Since that time they have been working to bring together 120,000 employees and about 1,000 airplanes, plus nine hubs, under one unified roof. The next giant step will be on October 17, when the company will transfer the reservations system of US Airways into the American Airlines system.
A new mega-airline company will be created when American Airlines and US Airways take advantage of the Department of Justice’s decision to allow the two companies to merge, making them the world’s most expansive airline.
Last August the US government tried to prevent the merger, claiming competition would be restricted, causing ticket prices to rise on hundreds of routes around the country.
The airlines counter that this deal actually will increase competition now that there is a real competitor to United Airlines and Delta Air Lines, two companies which recently grew after their own mergers.
Tuesday’s settlement with the Justice Department still requires the approval of a federal judge in Washington, DC. One requirement of the agreement is that American and US Airways will need to give up their take-off and landing rights at Reagan National in DC and La Guardia Airport in New York. They will also need to give up some of their gates at airports in Boston, Chicago, Los Angeles, Dallas and Miami, allowing low-cost carriers to have them. This move is to offset the impact of the merger on smaller airlines, increasing competition.
Eric Holder, the attorney general, said that the agreement would increase competition on nonstop and connection flights all over the country. The Justice Department said that the relinquishing of gates and routes at the country’s major airports by the newly merged entity was a “groundbreaking” move.
US Airways Chief Executive Doug Parker, who will head the newly merged company said,
“This is very good news and we are grateful to all who have made it happen.”
He added his thanks to politicians and business leaders who supported US Airways and helped push for the merger. The companies are expected to complete the move to merger in December.
Airlines today simply cannot afford to leave empty seats alone; as fuel costs and other expenses climb almost as quickly as a plane at take-off, airlines are being forced to push their load factors to the limits.
If you have felt that planes are becoming increasingly more crowded over the years, you are right. This past summer was one of the best summer seasons in airline history, with summer always being the busiest season for airlines. The US Airways Group stretched their load capacity up to a record 87.9 percent in August. This August record was just one more in a series of monthly records for load capacity for this airline. American Airlines, which is a proposed merger partner with US Airways, also had a load capacity record in May of 84 percent. Other airlines have similar figures: United Airlines hit 87.2 percent in July, and Delta soared to 87.3 percent in August.
Rising jet fuel prices are driving airlines to stuff in travelers. Over the past ten years the annual average load has climbed from 71.9 percent in 2002 to 82.8 percent in 2012. The increasing load capacity has not resulted in an increase in profits- the load capacity “break-even” point for US flights has gone from 69.4 percent in 2000 to a whopping 80.9 percent last year.
“One reason planes are fuller is because they have to be to avoid losing money,” says John Heimlich, chief economist at Airlines for America, the U.S. airlines’ trade group. “The airlines had to push really hard on the load-factor lever because they couldn’t push hard with the pricing.”
In the wake of the March 27th approval of the merger of AMR with US Airways, the same judge dismissed a proposed severance package of $19.9 million for AMR Chief Executive Officer Thomas Horton.
Judge Sean Lane of the US Bankruptcy court in Manhattan released his decision last Thursday to disallow the large severance package after approval of last month’s $11 billion merger between American Airline’s parent company and US Airways, explaining that the payoff was against federal bankruptcy law.
Lane made the suggestion that Horton’s severance pay be better addressed during the discussion of AMR’s reorganization plan. This plan has not yet been submitted, and will need the approval of creditors.
Tracy Hope Davis, trustee of the US Department of Justice and monitor of the bankruptcy proceedings was equally against Horton’s large payout.
“It’s American Airlines’ current intention to address Mr. Horton’s compensation arrangement in the plan of reorganization,” said Mike Trevino, a spokesman for American.