News Column

US Airways Shareholders Approve Merger Plan

July 12, 2013
US Airways Shareholders Approve Merger Plan

US Airways shareholders voted to approve the carrier's plan to merge with American Airlines on Friday at a meeting in New York City.

The company now needs antitrust approval from the U.S. Department of Justice and final confirmation from the bankruptcy court overseeing American's Chapter 11 case to close the merger. US Airways CEO Doug Parker told shareholders the deal is still on track to close later in the third quarter.

Parker also said integration talks between American and US Airways are proceeding well. Between the two companies, management employees have different styles, Parker said, but he doesn't think that will be a problem.

"Management cultures may be somewhat different, but most employees are not management," Parker told shareholders.

The combined airline will be the world's largest. It will be called American Airlines and be headquartered in Fort Worth, Texas, American's current headquarters city. Parker will lead the combined airline, and many of the top management spots will be taken by his current US Airways executive team.

Charlotte Douglas International Airport will be the combined airline's second-busiest hub, behind only Dallas/Fort Worth International Airport. US Airways operates almost 650 daily flights from Charlotte Douglas.

Parker has repeatedly said Charlotte Douglas is a profitable hub, and that the hub won't be cut after the airlines merger. On Friday, he said that one of the main strengths of US Airways' business models is that 99 percent of its traffic goes through one of its four hubs.

At the shareholder meeting, a man from Philadelphia told Parker he hoped Philadelphia International Airport would remain a hub for the new American Airlines. Philadelphia is currently the second-busiest hub for US Airways, but it is very close to JFK International Airport, an American hub.

Parker said the merger will allow the new carrier to build on the Philadelphia hub, not shift service away. "It will just make the hub stronger," Parker told the man.

Another issue Parker addressed was the ongoing question of whether American and US Airways will be forced to give up slots at Washington's Reagan National Airport to win regulators' approval. Competitors such as JetBlue have said the combined company will have too many slots there -- about two-thirds of the total.

US Airways has said that if it gives slots to competitors, they will fly from Washington, D.C. to larger markets, such as New York, instead of the small cities US Airways currently serves from Reagan National. Parker also said that the merged airline will only have about 25 percent of flights in the total Washington-area market, including the Dulles and Baltimore-Washington airports, and that many hubs have far higher concentrations of one main carrier than two-thirds of flights.

At Charlotte Douglas, for example, US Airways accounts for about 90 percent of daily flights, and after the merger with American that will increase to about 94 percent.

"We would argue that's terrible policy," Parker said of divesting slots at Reagan. "We think it's a terrible use of scarce resources."

The Reagan National slots are the only major antitrust concern that has been publicly discussed. Parker predicted US Airways and American will still win regulatory approval for the merger soon. "We fully expect to get DOJ approval to close this merger in the third quarter," he said Friday.

At the meeting, a group of subcontractors from various airports who provide services such as wheelchair operation and security also complained to Parker about low wages and bad working conditions. One woman who said she pushes wheelchairs at Philadelphia International said she makes $7 an hour and hasn't received a raise in six years.

Another who works at JFK said she makes poverty wages.

"I got more money when I was home on public assistance than I do now on a 40-hour week," she said.

Parker told the employees he supports their right to organize, but can't do much to change their conditions, since they work for contracting companies and not the airline.

"We like to know that our services are being done by people who have the same commitment to our customers as we do," said Parker.

Parker closed the meeting by thanking shareholders for attending. "It certainly appears it's going to be the last shareholder meeting at US Airways," said Parker.

Source: (c)2013 The Charlotte Observer (Charlotte, N.C.). Distributed by MCT Information Services.

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