Fallout from airline merger for Las Vegas, visitors industry unclear

DALLAS — US Airways CEO Doug Parker has landed the big merger he sought for years. Now the soon-to-be CEO of the new American Airlines has to make it work.

Planes need painting. Frequent flier programs have to be combined. And the new airline will still be weak in Asia and need to win back business travelers who have been drifting away to other airlines.

The two airlines announced an $11 billion merger Thursday that will turn American into the world’s biggest airline, with some 6,700 daily flights and annual revenue of roughly $40 billion.

It’s a coup for Parker, who runs the much-smaller US Airways and has long pursued a deal like this one with the strong belief that airlines would have a better shot at consistent profits if they bulk up through mergers.

The latest deal will mean that the four biggest U.S. airlines are all the product of mergers that began in 2008. Those deals bring benefits, but they also show that putting together two airlines smoothly is not easy.

Some of the work on the latest combination has already been done.

Pilots from both airlines have agreed to the outlines of a deal that should make it much easier to get a final, joint contract.

And Parker is inclined to use American’s computer systems such as those that track reservations and passenger information, he said on a conference call.

He said past mergers have shown that it’s easier to use the bigger airline’s technology, because then fewer people at the smaller airline need to learn it.

At McCarran International Airport in Las Vegas, American and US Airways combined would have been the second-largest carrier with 4.4 million passengers last year, well behind the 16.3 million that flew on Southwest but ahead of No. 3 United’s 3.8 million.

However, the past three major mergers have not worked out well for Las Vegas and the visitor industry that craves airline service, even though the deals involved few or no overlapping routes.

The number of seats declined following the combinations of Delta and Northwest, United and Continental, and Southwest and AirTran. Only Delta now has more flights.

This month, Delta has scheduled 274 flights a week out of Las Vegas, 5.8 percent more than the same month five years ago when it and Northwest were still separate. But by using smaller planes, the number of seats has dropped 3.1 percent to 42,994.

United now has 328 weekly flights, 1.9 percent fewer than three years ago, and 10.4 percent fewer seats at 43,075. It completed its merger with Continental in October 2010.

Southwest and AirTran’s 1,357 flights a week marks an 8.9 percent drop compared to two years ago, while the number of seats is down 2.3 percent at 196,741.

Although the AirTran takeover was completed in May 2011, the two still operate as separate brands at McCarran under common management.

A probable consequence of the latest merger is that US would move from Concourse A to Concourse D next to American’s gates. Discussion of a US shift has circulated for months, but could not go far because of the questions surrounding its future.

When the likely move happens, it would leave Concourse A, the oldest part of McCarran, completely empty.

Meeting with Wall Street analysts last year, Las Vegas-based Allegiant Travel Co. executives indicated an interest in switching from Concourse D to Concourse A. On Thursday, an Allegiant spokeswoman said the concept is still alive, but still faces several logistical hurdles.

Review-Journal writer Tim O’Reiley contributed to this report. Contact him at toreiley@reviewjournal.com or 702-387-5290.