America West and
US Airways, respectively — have announced plans to merge their operations, which when finalized would make the new airline the sixth largest, supplanting
Southwest Airlines. Although the new airline will retain the US Airways name, it will be run out of Tempe, Ariz., America West's headquarters, and will be run by Doug Parker, chairman, president and CEO of America West.
The new airline intends to compete directly with Southwest Airlines, one of the few national carriers that is profitable. The new US Airways will operate as a low-cost hub-and-spoke network, combining America West's routes throughout the western U.S. with US Airways' presence throughout the eastern U.S.
US Airways is currently in Chapter 11 bankruptcy — its second time since the Sept. 11 attacks threw the entire airline industry into a tailspin. It is expected that the combination of the two airlines will generate $600 million in annual cost savings and revenue synergies, and will produce $10 billion in annual revenues. The new airline will have its primary hubs in Charlotte, Phoenix and Philadelphia, and secondary hubs in Las Vegas and Pittsburgh.
The deal has to be approved by the U.S. Bankruptcy Court, as well as winning other regulatory approvals.
