American Airlines’ Board of Directors will meet on Jan. 9 to decide whether to merge with US Airways, according to this report by Bloomberg News.
The outcome, of course, has ramifications beyond those employees of both airlines. These include, in no particular order:
- A shift in the oneworld and Star Alliances. US Airways is part of the Star Alliance, though its route system is hardly a key part. Since US says it will adopt the AA name, look for US to move into the oneworld alliance. An AA-US merger strengthens AA’s East Coast reach, but other than this we’ve not seen a great deal of routes that US brings to AA. On the other hand, AA brings a lot more to US.
- Airports will see revisions to facilities as both airlines consolidate.
- Some cities will see reductions in service as duplications are eliminated.
- If the US management is the one that emerges in charge (as we hope), then this will be a major plus for the future of the new American Airlines. If AA’s management is the survivor, we’re much less sanguine about AA’s future.
- Airbus and Boeing should both benefit. Before bankruptcy, American placed orders for hundreds of current generation A320s and 737NGs as well as the re-engined models. US has a large order for A320ceos and A330s, but no A320neos. American’s fleet replacement need is so large that it probably needs both single-aisle OEMs. We could see some adjustment in the orders, which never were firmed up, and taking into account the US outstanding orders. But we’d be surprised if the new AA were to cancel entirely American’s Airbus or Boeing orders.
- Nor do we see US canceling its A350 orders in favor of AA’s outstanding 777 order. US is one of the remaining A350-800 customers and this might be upgraded to the A350-900. But we think there was a fair chance of this happening anyway.