US Airways, American Airlines near merger

Merger would create world's largest airline

MIAMI - A merger between US Airways and American Airlines, which would create the world's largest airline, could be announced next week, sources say.

American Airlines' pilots union has already signed off on a Memorandum of Understanding, sources say. US Airways' pilots union is expected to tally its vote Friday afternoon.

"They now have said we don't think a merger is such a bad idea after all, but part of that is sort of realizing which way the wind is blowing and you know what, if this is going to happen without us, we at least want to be part of the process," said Seth Kaplan with Airline Weekly.

"The good part of this potential merger for the pilots here is they will see increased wage rates. They will see some increased vacation," said US Airways spokesperson Capt. James Ray. "There are also some things that are not a benefit. As an example, health insurance premiums will go up considerably."

Kaplan said seniority, especially among pilots, could be an issue.

"You can work these things out with money," he said. "Money does not solve all problems but (it solves) a lot of problems."

Kaplan believes some fares could increase if the merger happens. For example, American Airlines and US Airways both offer non-stop service from Miami to Charlotte, N.C. and Miami to Philadelphia.

"On one hand, fares might go up a little bit," said Kaplan. "On the other hand, the old days when fares were cheaper and you had airlines going bankrupt all the time, that wasn't good for airlines, their employees, or consumers either. So maybe an industry that is a bit more stable but a bit more pricey to fly."

The federal government would still need to approve the merger.

"Labor unions used to be very suspicious of airline mergers, but these past several mergers, Delta (and) Northwest, United (and) Continental, Southwest (and) Airtran have worked out very well of unions and they see this as a positive," said Kaplan. "There is most likely going to be a deal and it is probably going to be soon, but even if they announce it tomorrow (Friday), it would take some time before the frequent flier programs, let's say, are merged, certainly before the employees of both airlines are all working together."

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