Failed US Airways Bid Helps Charlotte Hub

Feb. 1 -- US Airways' failed bid for Delta Air Lines will ensure that Charlotte remains a major airline hub, along with keeping more competition in small cities throughout the Carolinas and the Southeast.

It may also end other airlines' talk of becoming bigger through mergers, at least temporarily.

And for US Airways, the end of its 11-week quest to buy Delta and create the world's largest airline means it must return to the less glamorous task of fully integrating America West and US Airways, which merged 16 months ago. That includes creating a single computer reservations system and forging new labor contracts with its unions.

US Airways pulled its $9.7 billion bid Wednesday morning after it realized Delta's creditors committee would not support the merger. Instead, the creditors signaled their intent to back Delta's plan to exit Chapter 11 bankruptcy protection as an independent carrier. Under bankruptcy law, Delta's creditors have the lead role in deciding the company's fate.

After US Airways announced its hostile takeover attempt in mid-November, other major airlines played defense, sizing up other merger partners so they wouldn't be left out. But with fuel prices down from record highs and most airlines having shrunk their fleets to reduce unsold seats, carriers are making money again.

The urge to merge may be waning.

"If both Delta and Northwest emerge (from Chapter 11 bankruptcy protection) standalone, you won't see consolidation," US Airways Chief Executive Doug Parker said Tuesday, a day before withdrawing his Delta offer. "It won't happen until the next down cycle."

Charlotte, home to US Airways' biggest hub, was worried about losing flights and employees to Delta's massive Atlanta hub.

Charlotte today is in a much better position.

Not only will US Airways keep its hub in Charlotte, but any future merger partner -- such as Northwest, United, American or Continental -- would likely keep Charlotte robust as well. Those airlines don't have a large presence in the Southeast.

"Charlotte has nothing to worry about," said Evergreen, Colo., aviation consultant Mike Boyd, who added he believes there will be no mergers this year.

US Airways might attempt another merger in the future but now will focus on integrating into one airline. America West and US Airways still operate officially as two separate airlines. The biggest challenge is converting to a single reservations system, which is scheduled for March. That will eliminate headaches that sometimes occur when passengers aren't able to check in for both parts of a connecting flight when one stage is on a US Airways plane and the other is on an America West plane.

The airline must also finish negotiations with its labor groups. Today, America West and US Airways pilots and flight attendants work under their old contracts and fly only their own planes.

Also, the airline will announce this month the location of a new flight operations center. Charlotte is competing against Pittsburgh and Phoenix for the center, which would create 600 new jobs.

Despite being one of the most profitable carriers in 2006, US Airways won't grow significantly this year.

US Airways President Scott Kirby said because oil prices are still high by historical standards the airline won't restore many early-morning or late-night flights.

That means remaining flights will be fuller, offering fewer opportunities for discounts.

Even though the US Airways-Delta deal is dead, others said airlines will still look for partners.

"(Chief Executive) Glenn Tilton at United has said this isn't an industry run by Doug Parker," said Darryl Jenkins, a visiting professor at Embry-Riddle Aeronautical University. "We're going to see a whole lot going on (consolidation) this year."

Delta had rallied its employees by pledging to remain independent. Chief Executive Gerald Grinstein has said emphatically that Delta hasn't talked to Northwest about a merger, as was previously reported.

But The Wall Street Journal reported earlier this week that Delta told its creditors it could be open to a merger in the future.

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