February 25, 2010
Consolidation in the US airline industry is “inevitable,” the president of the US Air Line Pilots Association union said on Wednesday.
Captain John Prater told the Reuters Travel and Leisure Summit that under current circumstances, a combination between United parent UAL and Continental Airlines made more sense, as the carriers have little route overlap.
However, Prater added that he had no indication from the companies that they were having merger discussions.
This week, executives at United parent UAL and US Airways told the summit their carriers were open to consolidation opportunities.
Prater, who said that ALPA was in bargaining at half of the 38 airlines where it represents pilots, said his union would support mergers that save jobs.
“We’re for the right consolidation, consolidation that actually protects and enhances jobs and creates a profitable carrier,” he told reporters in New York.
He said potential catalysts for a next round of airline mergers could include a big rise in fuel prices or perceived success of Delta Air Lines, which acquired Northwest in 2008, against rivals. That merger made Delta the world’s biggest carrier.
Prater added that mergers could also come among regional carriers, which he said will face a pilot shortage over the next couple of years as workers defect to larger carriers.
“I think we’ll see some consolidation in the regional industry and it’ll be for efficiencies,” he said.
Laura Wright, Southwest Airlines chief financial officer, also said the regional airline industry could be poised for transformation.
“There’s no question that the economics of their operating model have been affected greatly by energy prices,” said Wright. Southwest does not work with regional airlines.
Prater said ALPA was optimistic about being able to negotiate pacts that would help recoup some of the wages and benefits pilots lost in the past decade as bankrupt airlines were able to extract concessions.
(Reuters)