Struggling US Airways Is Still Alive

The continued existence of US Airways, which is in its second round of bankruptcy protection and now flirting with a merger, defies the conventional wisdom in vogue since the airline industry went into a tailspin in 2001.

An agreement it reached in November with General Electric Co., which has a financial stake in more than half the airline's planes, gives the company access to $140 million and calls for it to return 25 aircraft to GE in the next three years.

GE has also reached agreements that have been helpful to Delta and Independence Air.

Although some airline analysts have professed surprise at GE's willingness to reach agreements with financially shaky airlines, GE spokesman Eric Jones says his company makes business judgments case-by-case, and that deals it enters into benefit airlines and GE.

"We make business decisions," he said. "We like to support our customers when we can, and deals have to make sense for us."

The strategy is apparently working. GE said this month that earnings from its aviation segment rose 13 percent in the first quarter, compared with the same period a year ago, to $163 million.

Last week, when news of merger talks between US Airways and America West broke, analysts were mostly skeptical, saying mergers traditionally have failed to solve the industry's problems.

Typically, forecasters of consolidation have painted scenarios of carriers shutting and alleviating a glut of seats. That would allow survivors to raise fares and start making money again.

But now with talk of a US Airways/America West link-up, expectations for sudden relief in the industry's overcapacity have dimmed.

Still, with high fuel costs, fierce competition and big losses, most analysts say they believe that eventually, something's got to give. Sometime.

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