US Airways, America West to merge

updated 11:10 a.m. ET May 20, 2005

TEMPE, Ariz. - US Airways and America West, two struggling airlines that serve opposite sides of the country, are billing their proposed merger as a buffer against the new era of low-cost rivals, high fuel costs and a flood of cheap fares.

If the combination gets government, shareholder and labor approvals, the new company would become the nation’s No. 6 airline in terms of passenger miles, an industry measure.

It will fly under the US Airways name, which enjoys far better recognition among East Coast business travelers, the companies said Thursday.

The combined company has attracted $1.5 billion in new capital from several investors, including a $250 million loan from Airbus. The European aircraft maker has long been a supplier to both airlines.

US Airways Group Inc. has a strong presence on the East Coast and in the Caribbean, while America West Holdings Corp. operates across the West. The goal is to form a stronger airline that would compete better with lower-cost rivals such as Southwest Airlines Inc. and JetBlue Airways Corp.

“These two airlines are so much stronger together,” said Doug Parker, America West Holdings’ president and CEO. He will serve as chief executive of the combined company.

The merged airline will be based in Tempe, America West’s home. The airlines plan to merge their frequent flier programs, with current members retaining their full mileage balances.

US Airways President and CEO Bruce Lakefield said the merger will ensure US Airways’ long-term viability and the security of its employees.

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