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Merged America West/USAirways would make profit by ’07
US Airways and America West will earn $316 million in 2007 if they are allowed to merge.
The projection was filed with a US Bankruptcy Court. It shows the new US Airways losing $204 million for the fourth quarter of this year, if the merger clears regulatory, shareholder and bankruptcy court approvals, according to the Pittsburgh Post-Gazette.
Despite ongoing threats and pricing pressures from low-cost competitors, US Airways executives predict that increased commuter traffic will push revenue up to $10.9 billion in 2007. At the same time, labour costs will drop by $30 million as the airline reduces its administrative work force.
The result would be the first profitable year for US Airways since 1999, excluding an extraordinary gain when it exited bankruptcy in 2003, said the newspaper. Airline executives admit the rising price of oil, up to $60 per barrel, made predictions difficult.
America West, which would essentially run the new US Airways, told employees earlier this week that it can be a “survivor” in a world of $60 oil and make money if other carriers fail and free up the supply of seats industry-wide.
Analysts agree the new US Airways could survive high oil prices but disagree with the assumption that failures elsewhere in the industry would lower the total number of seats in the air. Most analysts also believe that little can derail the merger. The goal is to have the deal completed by September or October.
Report by David Wilkening
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