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Mayors oppose Justice in US Airways merger

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By Philadelphia Inquirer
Wednesday, Oct. 23, 2013, 8:12 p.m.
 

US Airways Group reported Wednesday a lower third-quarter profit than a year ago, as expenses related to its proposed merger with American Airlines and other items offset the benefits of rising passenger traffic and higher average airfares.

The carrier, which is fighting a Justice Department lawsuit challenging the planned merger with American's parent AMR Corp., said net income fell to $216 million, or $1.04 a share, in the latest quarter, from $245 million, or $1.24 a share, a year earlier.

Meanwhile, the mayors of seven of the country's largest cities sent a letter to U.S. Attorney General Eric Holder Wednesday, urging him to “reconsider” the Justice Department's “ill-conceived lawsuit.”

The mayors signing the letter represent cities with airport hubs for either US Airways or American.

“As mayors of some of the largest cities in the United States, we know the airline industry creates jobs, supports local business, attracts new business and promotes infrastructure growth,” the letter said.

The mayors noted the Justice Department allowed Delta-Northwest and United-Continental to merge, and blocking the American-US Airways deal would put their cities at a competitive disadvantage to Atlanta, Newark, and other competing hub airports that benefit from the Delta and United mergers.

The mayors asked Holder to settle the lawsuit and to allow the combination of the two airlines to proceed.

They were: Mike Rawlings of Dallas; Betsy Price of Fort Worth; Patsy Kinsey of Charlotte; Carlos A. Gimenez of Miami-Dade County, Fla.; Michael Nutter of Philadelphia; Greg Stanton of Phoenix; and Rahm Emanuel of Chicago. Dallas-Fort Worth, Miami and Chicago are American hubs, while Philadelphia, Phoenix and Charlotte are US Airways hubs.

Excluding merger-related costs and other special items, US Airways said pretax profit was $367 million, up from $174 million a year ago. Profit came to $1.16 a share, compared with analysts' average estimate of $1.12.

Revenue in the quarter rose 9 percent to $3.9 billion. Passenger unit revenue, the amount for each passenger flown one mile, rose 5.1 percent “driven by a 4.4 percent increase in passenger yield,” a measure of airfare pricing. Mainline passenger traffic rose nearly 6 percent compared to a year ago.

US Airways CEO Doug Parker said, “Our teams continue intensive integration planning work in preparation for our merger with American Airlines.” US Airways and American “remain committed to building a combined airline that can compete in the global marketplace.”

“We are eager to present our case and are grateful for the enthusiasm and support our merger continues to receive,” Parker said.

The Justice Department sued to block the merger in August, contending it would reduce competition and lead to higher fares. A federal court trial in the case is scheduled Nov. 25. A combined American-US Airways would be the world's largest airline.

 

 
 


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