US Airways' CEO Parker presses case for merger with American

ByABC News
July 11, 2012, 7:44 PM

— -- Doug Parker, the CEO of US Airways, is a frustrated man.

The head of the nation's fourth-biggest network airline says he hasn't been able to press his case with American Airlines' executives and its creditors that the best path out of bankruptcy for the nation's third-biggest network airline is to merge with him.

So he's taking his case public. He told USA TODAY's Editorial Board on Wednesday that the only way American — and US Airways, for that matter — can survive is to combine to compete with giants United and Delta, the nation's biggest carriers, which have gone through mergers of their own in the last four years.

"What we're talking about here is a proposal not to break up the company, but rather, to make it stronger," he said. "We're — unfortunately, because of the bankruptcy process — having a little bit of trouble."

A day after American CEO Tom Horton wrote a letter to employees saying that he's open to the idea of a possible merger with parties he did not name, Parker, 50, told the Editorial Board that he's yet to hear from Horton.

Since American's parent company, AMR, declared bankruptcy in November, its executives have said that they want to emerge from it as an independent entity. American has until Dec. 28 to come up with a plan for restructuring itself as a stand-alone company. But in his letter, Horton said that the company has made progress in its efforts to restructure, posting higher revenue for the third-consecutive month in June and reaching tentative new agreements with labor unions.

All that has led him to conclude "that it now makes sense to carefully evaluate a range of strategic options, including potential mergers, which could make the new American even stronger."

It's a conclusion that many airline executives have made in recent years as they've tried to survive a down economy and higher fuel costs. Delta merged with Northwest, and United merged with Continental, making them the two most powerful network airlines in the nation. Even low-cost carriers have decided they can't go it alone: Southwest acquired AirTran.

Parker is a veteran when it comes to mergers, both successful and unsuccessful. He was at the helm of America West when it merged with US Airways in 2005. Since then, he's been courting others, most notably Delta. He failed to close that deal, partly because he couldn't win the support of employees.

This time, he's got American's labor unions on his side, having aggressively lobbied them by pledging to save jobs.

Parker is arguing that this is American's last, best shot for a successful merger. But in many ways, it's also Parker's last, best shot. "This would be the last consolidation of large network carriers," he said.

Joining forces against United and Delta, he said, would benefit consumers by creating competition. US Airways' strong East Coast presence plus American's global network would make them a force to be reckoned with, he said.

United and Delta, he said, "are doing a really nice job of building a global brand that can be everything to everyone. But there are only two of them. … This would create a third, and choice is good for consumers."