Airline CEO Says Mergers Likely

At least one airline merger and probably more will be announced this year, possibly next month, the chairman and chief executive of US Airways says.

Doug Parker wouldn't say if US Airways, Charlotte's dominant carrier, is in merger talks with other airlines. However, during a conference call Thursday, Parker said speculation about two other airlines, United and Continental, has ignored a key fact.

Many analysts say a United-Continental merger could follow a deal between Delta Air Lines and Northwest Airlines. Continental is part of the SkyTeam, an airline alliance that also includes Delta and Northwest, while United is in the competing Star Alliance.

With Continental offering a global gateway at its Newark, NJ, hub -- in the New York City metro area -- Parker questions if SkyTeam would actually cut ties with the airline.

Without Continental, United could seek another partner, but Parker wouldn't say if it could be US Airways. The two airlines made a deal in 2001, but the U.S. Department of Justice rejected United's $12.3 billion takeover.

In any case, Parker says, airlines considering mergers likely need to announce plans by the end of February to get federal government approval before a new president takes office. The next administration may be wary of business consolidation.

"Something's going to happen," he says, calling the current industry "too fragmented."

Many analysts say a Delta-Northwest merger is most likely, and that US Airways isn't a desirable partner because it has fewer international flights -- which are more profitable than domestic flights -- than other carriers. US Airways also still hasn't combined separate labor groups from its 2005 merger with America West Airlines.

Parker says that one merger -- "I don't think Delta has any choice at this point" -- would trigger other deals that eventually could involve all six major U.S. airlines, including US Airways, that have domestic and international service.

US Airways made a hostile bid for Delta in November 2006, when Delta was in bankruptcy. Parker pulled the bid last Jan. 31 after opposition from Delta management, who told shareholders the airline could exit bankruptcy as a stand-alone carrier.

"We offered those guys $10-11 billion in value, which they turned down," Parker says. " ... Today their airline is worth something less than $5 billion."

The US Airways-Delta merger would have reduced capacity by about 15 percent, says Scott Kirby, US Airways president. In the America West merger, Kirby says, US Airways removed nearly 70 planes from a mainline fleet of more than 400.

Although he's a big fan of consolidation, Parker cautioned against speculation that doesn't address all of the issues in a merger, as in the case of United and Continental.

"There's more behind all of these transactions," he says, "than simply trying to look at two route maps or simply trying to put these two pieces together."

New US Airways Express president

US Airways on Friday named Dion Flannery as president of US Airways Express.

Flannery, 41, is now vice president for financial analysis at US Airways. He succeeds Robert Martens, who is retiring, and will report to Robert Isom, the chief operating officer for US Airways.

Flannery will oversee US Airways' wholly owned regional carriers, Piedmont and PSA Airlines, and seven regional affiliates that operate as US Airways Express. The express operation carried more than 25.7 million passengers on 286 planes last year.