Airline industry focuses on fate of US Airways

That may just be what its competitors want. While Mann estimates that US Airways only holds about 5 percent of U.S. airline business' system capacity, a US Airways shutdown could give big relief to its rivals, especially those operating in East Coast markets like Charlotte, N.C., Philadelphia and Pittsburgh where US Airways has a stronghold.

A US Airways liquidation could also be particularly helpful to United Airlines by giving it a better chance of securing financing so it could emerge from bankruptcy protection, which it has been operating under since December 2002, Mann said.

And by removing US Airways from the competitive landscape, that would ease up some pricing pressures across the board. "The fewer players you have, the more likely that you will see more pricing stability and fewer price cuts," said Philip A. Baggaley, managing director at Standard & Poor's credit ratings services.

Views differ, however, on the potential industry effect should US Airways sell off its parts or team up with another carrier. It does hold some highly coveted airport facilities in some large markets, which could be attractive to competitors.

While US Airways and America West have confirmed that they are in talks, no specifics of the potential deal have been released. Such a marriage could potentially create a stronger, bigger airline that has presence nationwide, with US Airways' East Coast routes linked with America West's network in the West. But the combined company could also scale back capacity on some routes where the airlines' businesses overlap.

No wonder that the rest of the business is watching to see the outcome of this potential deal as well as others that might come along.

Gerard Arpey, chairman and CEO of American Airlines' parent AMR Corp., weighed the good and bad that could come from industry consolidation.

"If it takes capacity out of the industry, I think that would improve the revenue environment and improve industry conditions," he said during a conference call after the American Airlines reported earnings last week. But he added that "if on the other hand it preserves capacity that might otherwise go away, that would be a bad development."

It makes sense why US Airways is on its competitors' minds. Its fate has to be.

MORE FROM AVIATION

Aviation Section Front

Mechanics target overseas airline maintenance Boeing 787 takes flight after two-year delay British Airways seeks legal action to stop strike British Airways crew to strike over Christmas Boeing: 787’s first flight may be Dec. 15 Boeing’s delayed 747-8 completes engine test American, partners offer $1.1 billion to JAL U.S. airlines' passenger revenue falls BA, Iberia say merger a plus for passengers Boeing chooses S.C. for new 787 line Aviation Section Front   Add Aviation headlines to your news reader: