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U.S. Airways and America West jets await
take-off from Sky Harbor International Airport Thursday, May 19,
2005 in Phoenix. |
US Airways Group Inc. and America West Holdings Corp., the nation's
seventh and eighth largest carriers, are merging to create an airline
designed to better compete with lower-cost competitors.
The combined company will fly as US Airways and would become the
nation's sixth largest airline. It will be funded by $1.5 billion in new
capital from a variety of investors, including aircraft maker Airbus.
The goal of the merger is to stitch together two geographically
distinct carriers with a history of financial struggles into a stronger
airline that would compete better with lower-cost rivals such as Southwest
Airlines Inc. and JetBlue Airways Corp. US Airways has a strong presence
on the East Coast, and in the Caribbean, while America West operates
across the West from hubs in Phoenix and Las Vegas.
The airlines plan to merge their frequent flier programs, with current
members retaining their full mileage balances.
Doug Parker, chief executive and president of America West Holdings,
called the combined company "the first nationwide, full-service, low-cost
airline."
"These two airlines are so much stronger together," said Parker, who
will become CEO of the new company.
Financing for the deal includes a $250 million loan from European jet
maker Airbus. In return, the merged company will serve as a "launch
customer" for Airbus' new A350 jet, with deliveries scheduled from 2011 to
2013. The companies did not disclose the number of new jets to be ordered.
The new company will be based in Tempe, home of America West.
US Airways President and CEO Bruce Lakefield said
the merger will ensure US Airways' long-term viability
and the security of its employees.
Parker said he was not sure how many jobs would be cut if the merger
goes through. US Airways employs about 30,000, including 600 at its
headquarters in Arlington. America West employs about 14,000.
"I don't anticipate any major furloughs over and above" those that have
already been occurring Parker said.
Jack Stephan, spokesman for the US Airways unit of the Air Line Pilots
Association, said the union is "looking forward to being a part of the
creation of the nation's premier low-cost airline."
US Airways once had some of the highest-paid employees in the industry,
but several rounds of pay cuts reduced salaries to those found at America
West, which has pay scales at the lower end of the industry average.
Under the merger
deal, the companies would return a combined 59 jets to their lessor, reducing
the airlines combined fleet size by about 15 percent, Parker said.
(Agencies) |