Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
February 11, 2013 at 10:50 AM
Here comes the biggest airline
The boards of American Airlines and US Airways are reportedly planning to meet separately Wednesday to finalize a merger. According to the Wall Street Journal, US Airways’ Doug Parker will run the combined entity, which if approved by regulators would be the largest airline in the nation. If the deal is successful, it would make Parker, who became CEO of America West Airlines in 2001, one of the more successful airline dealmakers of recent years.
It was from quirky, beloved, bankruptcy plagued America West that Parker launched his winning bid for US Airways in 2005. He moved the headquarters here, to suburban Tempe near Phoenix Sky Harbor International Airport and was widely praised as a young visionary. Metro Phoenix doesn’t have many corporate leaders and Parker had brought/saved a rare asset. But more about that in a moment.
When I was business columnist for the Phoenix paper, I had a chance to see Parker up close. He’s very smart, numbers-driven but was mindful of the poor customer service and in some cases labor relations at the merged carriers. He pulled off the consolidation better than most would have expected — and this from a young gun, not a Stephen Wolf.
Parker wanted to maintain the good of legacy carriers while offering the cost competitiveness of discounters, especially Southwest Airlines. US Airways operates its largest hub here, but PHX is also Southwest’s largest station. It was a close-up laboratory.
How well Parker did can be endlessly debated. Customer satisfaction has often been poor. Integrating systems and personnel took years. Would you go out of your way to fly US Airways if you had a choice? Parker has been very tough to get his way (ask the former hub in Pittsburgh). On the other hand, Parker preserved the carrier’s lucrative East Coast franchises and employed Captain Sully. Parker is most of all a dealmaker who sees legacy carriers only surviving as behemoths.
This time, metro Phoenix will not win. A conservative estimate sees a net 5,500 jobs being lost from the merger here. Customers will lose choices and see higher fares on many routes. Parker has made it known that the combined airline, named American, will be headquartered in Texas. In its time, America West was to Phoenix what Alaska Airlines is to Seattle — more so considering the dearth of good corporate jobs here. Soon, this will be gone.
Today’s Econ Haiku:
Get that Money Magazine