The Next Merger

About 24 hours after the Southwest Airlines / Airtran announcement, rampant speculation on who American Airlines should partner with started up.  The truth is, while I can make an argument for them to merge/acquire US Airways, I think they’ll shy away from a merger.  If they do go shopping for an acquisition, I don’t think it will be oriented towards a real “merger” a la Delta/Northwest or ContiUnited. 

There are a couple of targets left.  Alaska Airlines strikes me as one that should interest Southwest, American Airlines and Delta.  I think it’s pretty hard to get a deal done with Delta because of regulatory issues particularly in the Seattle area.  I think it’s pretty hard to for AA to get a deal done with Alaska because both parties have high labor costs and AA just won’t know what to do with the rather unusual operations Alaska performs in Alaska. 

I don’t think anyone is going to buy jetBlue at present and jetBlue’s CEO says they’re going to grow organically.  I would be happy to see jetBlue just get outside of its NY/Florida comfort zone and stop treating the midwest like it has the plague.

Frontier could be an interesting proposition for jetBlue, I think.  Sadly, I also think that Republic Airways is going to hold on to Frontier for dear life given what’s going on in the regional airline world.  Nevertheless, I do think that jetBlue could harmonize Frontier’s service and routes to the jetBlue way and make something of that airline. 

US Airways?  Well, they are the somewhat pretty girl who never gets asked out anywhere except to make some other guy jealous.  Until they get their labor house in order, I think it’s going to stay that way.  Their executive corps, however, ought to be attractive to someone.  Despite all of US Airways weakenesses and their “East/West” style of ops, those guys make money.  There is a lot to be said for that. 

I think they are more attractive for bringing into a new alliance.  Currently, US Airways belongs to Star Alliance but ContiUnited kind of makes them look superfluous.  SkyTeam just doesn’t need them either.  Oneworld aka American Airlines/British Airways,  on the other hand, could perhaps take advantage of them.  The deal would have to be a bit sweet because US Airways, if nothing else, is enjoying a nice “under the radar” ride on Star Alliance right now. 

I can’t think of anyone who could find a use for Virgin America at this point except, well, the Virgin Group.  Even the Virgin Group seems to have a hard time seeing a real value for working with Virgin America.  If they had any money, I would point them to Frontier but I think Republic Airways would just laugh out loud.

The truth is, I think there is suddenly some opportunity out there to start a new airline.  I would look for weak airlines who have major hubs and very little competition.  Some place where business customers and leisure travelers alike are dissatisfied with their current offerings and restrictions.  Some place that has a history of embracing the airline industry and where you can hire experienced people to kick that venture off.  That would be a great place to start something new.  I wonder where such a place might be?

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5 Responses to “The Next Merger”

  1. Southwest needs to talk to Alaska Airlines,this would give Southwest the West Coast,State of Alaska,Canada,Mexico ,and Hawaii.This would make Southwest and Alaska Complete and it would be $$$$$$$$$$$$$$$$$$$$$$ for both airlines ,and they would be the power house in the industry

  2. I agree. In addition, it would also put a large dent in Delta as far as the Pacific Northwest is concerned. It also gives them access to a regional operations (Horizon) and an employee corps that, if anything, is more similar to Southwest than Airtran employees are.

  3. Jetblue is scared of the Midwest, look what is happening at Chicago’s O’Hare Airport.. Spirit Airlines and Virgin America have Jetblue beat to the ground there. CEO Barger doesn’t care about Chicago it was Neeleman who had a vision for that city and Jetblue and wanted to grow there. You think the Employees at Chicago are happy? Think again! Passengers always request to see other routes with Jetblue from Chicago I am a flight attendant for American who is a regular on Jetblue and I hear and see what is going on. I won’t be suprise if they pull out of O’hare soon.

  4. Alaska Airlines would buy SWA way before SWA would buy Alaska Airlines. Alaska Air has over a billion in cash reserves, they are the most profitable buisness model in the Industry while having the same fleet type there costs remain lower then SWA. Politically the State of Alaska would never go for the all coach no frills airline like SWA. I would look for Alaska to purchase SWA after they lose there 737-300 that is aging and now a hugh cost airplane. SWA also has a huge labor problem on the horizon while Alaska Airlines is currently in negotiations with AFA and its flight attendants a merger or even take over wont happen. Alaska Airlines is simply too expensive to buy and thus no garage sale will ever happen.

  5. HAHA ALASKA AND SOUTHWEST. Yeah right. Alaska is much too classy for an AS/WN marriage.

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