US Airways meeting to announce merger-vote results

Posted: July 13, 2013

US Airways Group Inc. will hold what is likely its last annual shareholders meeting Friday in New York City, with the merger with American Airlines pending to create the world's largest airline.

Many stockholders have voted in advance on the proposed combination, which will be called American. The results will be announced at the meeting.

Low-wage airport workers and community activists from several cities, including Philadelphia, plan to rally outside the shareholders meeting at 53d Street and Third Avenue to protest wages as low as $4.77 an hour, plus tips and no health insurance, for nonunion employees of companies that have contracts with airlines to provide services such as skycaps, wheelchair attendants, and aircraft cabin cleaners.

The U.S. Justice Department is weighing the impact of the merger on competition and flights for consumers, joined by attorneys general from 19 states. A federal judge has scheduled a hearing Aug. 15 to finalize American's restructuring plan to emerge from bankruptcy.

Aviation observers expect that regulators will approve the deal, likely to close in September, as the Justice Department did with the recent airline mergers of United and Continental, Delta and Northwest, and Southwest and Air Tran.

One area of scrutiny may be US Airways-American's concentration of takeoff and landing rights at Washington's Reagan National Airport. The new American would control nearly 70 percent of the market share at Reagan after US Airways acquired from Delta Air Lines two years ago 42 slots - which translate into round-trip flights.

In exchange, Delta got 132 slots at New York's LaGuardia airport used by US Airways Express flights. Delta also paid $66.5 million to US Airways, which in turn got international rights to fly in 2015 to Sao Paulo, Brazil.

In 2010, the Justice Department required Continental to sell takeoff and landing rights at its hub in Newark, N.J., to Southwest Airlines as a condition to regulatory approval to merge with United.

US Airways has argued in favor of maintaining a robust slot portfolio in Washington, noting it serves 40 small- and medium-size communities from Reagan National to places like Charleston, W.Va., and Des Moines, Iowa. "We are committed to small-city service for the long term," US Airways CEO Doug Parker told a Senate subcommittee in June.

If the airline is required to divest landing rights in Washington, a competitor might choose to fly only the most profitable routes, and smaller communities could lose air service.

US Airways' network in the eastern third of the country was inherited from predecessor airlines Piedmont, Allegheny, Pacific Southwest, and America West.

"Forcing US Airways-American to surrender slots [at Reagan] currently utilized to serve smaller cities so that JetBlue could fly to Orlando strikes us as a curious and regrettable allocation of public resources," Jamie Baker, airline analyst for JPMorgan Chase & Co., wrote in a client note, "and is likely a catalyst for certain attorneys general becoming involved, thereby constituting a positive development in our view."

With parties including Boeing Co., the Pension Benefit Guaranty Corp., American's Allied Pilots Association, the IRS, and the Treasury "in favor of this deal," Baker said, "outright regulatory rejection strikes us as a highly improbable outcome."


Contact Linda Loyd at 215-854-2831 or lloyd@phillynews.com.

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