What does the merger mean for travelers? In the short term, little will change on day-to-day business. Longer term will likely be a different story. In the short-term, travelers will see virtually no changes from either airline. The merger still faces regulatory obstacles and must be approved by the Department of Transportation and the Justice Department. If and when it passes that scrutiny, the process of merging the two airlines' operations will begin.
If you're holding a ticket on US Airways or American Airlines, that ticket will still be valid on the airline you planned to fly, on the day and time you planned to fly it.
When you get to the airport, you will head to the same airline check-in counter by which your ticket was issued. The only possible exception is if you are holding a ticket for many months out and your airline's schedule changes as a result of the merger of flight schedules.
In this case, you will be contacted by the airline ahead of time, typically to the email address you provided when the ticket was purchased. Members of either airline's frequent flier programs need not worry: Your miles are still valid on your airline and it's very unlikely you'll lose miles or elite status. As the pandemic recedes, business and international flying -- the most lucrative parts of the business -- are expected to return.
Southwest Airlines was the original discounter, but it is now one of the titans of the industry and no longer a maverick start-up. The Dallas-based airline remains the only major carrier never to land in bankruptcy court, and its simplified operations have a track record of remaining profitable even when rivals struggle.
The airline has run into some labor trouble as it scrambles to rebuild its schedule, but Southwest has shown over the years that it can fly through turbulence. This airline is the driving force behind much of the recent innovation in the industry. Atlanta-based Delta kicked off a round of consolidations that helped stabilize the business when it acquired Northwest Airlines in , and it has revamped pricing to better compete with discounters.
Delta even bought an oil refinery to help ensure its access to jet fuel supplies. Where Delta goes, its rivals follow. Post-pandemic Delta has a stable balance sheet and relatively strong labor relations, making it a good choice to be among the first international carriers to fully recover.
United Airlines has large operations catering to Silicon Valley and the U. The highly cyclical nature of those markets means that United's results can ebb and flow with tech or energy. United, which is based in Chicago, has historically been the envy of the industry due to its large presence in key business markets and its ability to offer unrivaled connections to corporate travelers.
That advantage has waned during the pandemic, but the network is still a key United advantage. American is a classic brand under new management and has been taking on more of a discounter mindset since its merger with US Airways. The Fort Worth-based airline operates a massive network and enjoys strong ties with important European partners. However, as the airline with the highest debts and a route network optimized for international travel, American could find it more difficult to shake off pandemic-related issues.
The U. Both are discounters focused on leisure travelers, who are expected to make up the bulk of demand in Investors should closely watch these companies as potential investments and see how they affect their more established competitors. Downturns tend to be good times for new airlines to emerge or for discounters to grow because airplanes tend to be available on the cheap. Investors should understand several airline-specific terms before buying any stock.
Here's what you need to know:. Short for revenue per available seat-mile, RASM is a measure of airline profitability. A company's seat-miles is the number of seats an airline has made available multiplied by the number of miles the airline's jets flew. Dividing revenue by seat-miles equals an airline's RASM.
RASM is important because all flights have different fare and cost structures depending on many variables, including flight distance and aircraft type. An airline's RASM helps to indicate whether it is selling tickets at any price just to fill seats or if it has enough pricing power to sell seats for profit.
Two different airlines could both have full airplanes, but, as an investor, you want to focus on the one able to do it with strong margins. It measures expenses the way RASM measures sales.
Load factor measures how well an airline is filling its seats. For an individual flight, it is as simple as saying 60 of 79 seats were full. Like most airlines, American was struck by the terrorist attacks in September This worsened after the financial crisis in , and the parent company of American Airlines, AMR Corporation, filed for bankruptcy protection in Like American Airlines, it grew in the early years through its mail services, serving the South and Midwest areas.
In , it changed its name to Allegheny Airlines and entered the jet age in with the Douglas DC It grew rapidly with several acquisitions but remained a Northeast focused operator. Deregulation in the US in allowed the airline to expand to other locations, and the growing airline changed its name to USAir. It became the largest operator of the DC-9 and the launch customer for the Boeing , which it worked with Boeing to design.
USAir continued the acquisition started by Allegheny Airlines, taking over several other airlines during the s. Flights to Europe began in the s. The early s brought difficulties for the airline, known as US Airways, since , as it had done for American Airlines. By , neither airline was in a great position.
American Airlines had filed for bankruptcy in American Airlines considered several possible airline mergers as part of its restructuring plans. It signed a nondisclosure agreement with US Airways in August as they began discussions of a potential merger.
Merging the operations of the two airlines took a lot longer than this. And there were, of course, many more shifts in personnel, locations, routes, and systems to sort out. It was not until October that the FAA awarded a single operating certificate for the new airline. And the US Airways brand was not discontinued until October
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