Do American Airlines and US Airways Really Need to Merge?
AMR Corp.’s (AAMRQ.PK) American Airlines on Thursday reported solid earnings that put the necessity of a planned merger with US Airways (NYSE:LCC) into question, since the company seems to be doing fine on its own.
The merger between the two airlines received approval from European regulators, AMR’s creditors, and both companies’ shareholders before being stopped by the U.S. Department of Justice, which believes that the merger will cut down on competition and raise prices for consumers. The airlines have vehemently denied that, saying the merger would better allow them to compete with super-airlines created from recent mergers like the one that produced United Continental (NYSE:UAL).
American Airlines’s revenue rose 6.2 percent to $6.8 billion in the third quarter, a record figure for the company. Net profit excluding reorganization and special items came in at $530 million, an improvement of $420 million year-over-year and the most profitable quarter in the company’s history. Those kinds of numbers bring to question if the company is really in desperate need of the US Airways merger.