US Airways plans regional hq in Philly

February 28, 2008 6:16:58 PM PST
Airlines that consolidate through mergers or acquisitions must reduce the number of planes in the sky and make the industry more efficient, US Airways CEO Doug Parker said Thursday.

"Consolidation for consolidation sake is not necessarily a good thing," Parker told reporters at a media event at the carrier's Tempe headquarters. "To take two airlines and just put them together and not create efficiencies by flying to all the same places with fewer airplanes doesn't create the value you need."

Some industry observers have speculated that if Delta Air Lines Inc. and Northwest Airlines Corp. combine, they might not cut a significant number of flights because their systems have little overlap.

Parker said that kind of deal wouldn't make much sense. "If that's the case, they're not increasing opportunity for anybody," he said.

For years, Parker has praised the benefits of consolidation in the industry. With fewer carriers in the sky, airlines will be able to pack more people on planes, maximizing the amount of money they can make per flight.

US Airways Group Inc. was created in 2005 when the former US Airways combined with America West Airlines. Parker said the move allowed management to trim 15 percent of flight capacity by cutting overlapping routes.

"You've got to go through and do what we did," he said. "This does not, by the way, mean you stop flying to certain cities. We're still flying to the same cities we served as US Airways and America West. We just do it a lot more efficiently. We do it with fewer airplanes."

US Airways tried again to consolidate again last year, but its $9.8 billion hostile bid for Delta eventually failed.

While most analysts are watching Delta and Northwest to make a deal, Parker said all large carriers will have the opportunity to combine with other airlines.

"I think it makes a tremendous amount of sense," he said.

"Hopefully we'll do it right instead of wrong."

At the media event in Tempe, US Airways President Scott Kirby also said the carrier will create a regional headquarters in Philadelphia.

"We need more executive leadership on the ground there," Kirby said. "It's also important because we sincerely need to and want to have a better working relationship with the airport authority and all constituents in Philadelphia than we've had historically."

The move isn't expected to create many jobs in the city. About 10 jobs will be added to the Philadelphia headquarters and some will be filled by US Airways executives who are currently in Tempe, according to Kirby.

"So it's not a huge economic impact," Parker said. "It's a big impact in terms of the relationship we have with people there."

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