US Airways-American may be the last big US airline merger. Here’s what’s next

February 7, 2013
February 7, 2013

The proposed merger between US Airways and American Airlines is likely the last move toward consolidation of the major airlines in the US. Antitrust issues and limitations on foreign ownership will make it difficult to do any more big deals.

Instead, the large airlines will probably focus on less ambitious tie-ups that give them access to more geographic areas without having to buy another company outright. Or they could focus on buying attractive regional carriers, like JetBlue, which is often seen as a coveted merger target but is known as a reluctant seller.

Emblematic of this more modest approach is Delta’s move in December to buy a 49% stake in Virgin Atlantic for $360 million, which will help it expand internationally and offers more flight choices to travelers flying out of Heathrow in the United Kingdom. The 49% stake had been owned by Singapore Airlines, which wants to focus more on its local market.

US Airways is the smallest of the big US airlines and, as a result, had been searching for a marriage partner for several years. Before setting its eyes on American Airlines last year, US Airways was in talks with United Airlines in 2010, but United ended up merging with Continental, instead.

After the United-Continental deal was announced, Continental CEO Jeff Smisek, who is now the boss at United, called US Airways the “ugly girl” at the airline prom and said United should marry the “pretty one.” Smisek later apologized.

Prior to the United talks, US Airways bid in 2006 for Delta, which was then in bankruptcy. That effort also failed, and Delta ended up merging with Northwest Airlines in 2008.

Now it looks like US Airways CEO Doug Parker, who will likely become head of the new combined airline, can finally walk down the aisle.

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