Airline mergers, part ..... (a continuing theme)
That headline up top should suggest to you that this is only one of many similar posts. I plan to throw as much news and commentary on airline mergers onto this blog as I can find. If you find enlightening information you want to share on airline mergers and industry consolidation, please use the handy comment form at the end of every post.
First up today: Analyst Bob McAdoo of Avondale Partners commented in a note to investors on what US Airways would bring to a marriage to American Airlines. Guess what? The contribution of the PHL hub would, he thinks, add more trans-atlantic connecting traffic to American's than it's going to get from its much-vaunted codeshare with Japan Airlines. You may need a glossary of terms to understand the report: He uses stock symbols for airlines, as in LCC for US Airways (the rest you can figure out). Here's what McAdoo says:
"U.S. East Coast/European capacity offered by the AMR/British Airways/Iberia oneworld alliance is 50% of the CAL/UAUA/LCC/Lufthansa Star alliance and is 60% of the DAL/NWA/Air France/KLM SkyTeam alliance. The city-pair connections served by oneworld, off the East Coast, comprise an even smaller percentage. If alliances exist, among other reasons, to offer seamless travel from anywhere in the U.S. to anywhere in Europe, oneworld is clearly deficient.
McAdoo goes on: "However, combining LCC and AMR would create a oneworld North Atlantic network competitive with the Star and SkyTeam offerings. By the numbers, LCC's Philadelphia hub is the most effective collector of traffic out of the north and eastern U.S. to Europe, surpassing the productivity of even CAL's Newark hub in terms of collecting connecting traffic.
"How valuable? We believe adding LCC's Philadelphia hub alone would add more daily connecting revenue to the AMR system than does JAL from all of Asia onto AMR."
In the full investor report, McAdoo concludes much the same thing others in his business have about the airline industry at the moment: This summer looks like a money-maker for many carriers because of higher fares, less capacity, a return of some business and leisure travel and moderating fuel prices. Hang on to your wallet time!