US Airways Looking for Merger With AMR

AMR Corp. is currently in bankruptcy protection and as the parent of American Airlines still has valuable assets that can be sold off or merged with a competitor.    US Airways is said to be in the process of putting together a package that would merge the two airlines and pull those now decaying assets of American’s out of an unsustainable spiral.

AMR has the exclusive right to file a reorganization plan for the next year, so any plans in this area are not imminent.  Analysts close to the situation have said that a merger would be far better for American’s creditors than if the airline tried to come out f bankruptcy on its own as it has had to cut its flight network to the bone, alienating many corporate customers.

A merger of #3 American with #5 US Airways would put the top 4 carriers in the U.S. on nearly equal footing while the consolidation would potentially put upward pressure on prices.  But, none of this is rational analysis because the airline industry, like the auto industry in the U.S. is now no longer even close to privately owned and operated.  The U.S. government has so thoroughly cocked-up the market that no rational discussion of pricing can take place without serious liquidation and reorganization; not that people with a marginal grasp of economics won’t try.