US Airways Group Inc (NYSE:LCC)-emerging from dark skies with AMR merger

Posted by Kristi Scott June 7, 2013 0 Comment 1570 views

In 2007, a critically-wounded airline industry saw no hope in sight. But today, more than 5 years later, it is on the mend. As a matter of fact, very recently most airlines have managed to outperform the S&P 500. In 2013, US Airways Group, Inc. (NYSE:LCC) has been one of three major carriers that had an astounding performance. The merger with The American Airlines parent company, AMR, with US Airways Group Inc (NYSE:LCC) will now make it the biggest domestic carrier. It also gives LLC the leverage to increase its international exposure.

The company is expecting to increase its overseas market-share which will boost its revenue. This is because international flights always operate on higher margins.  In addition to this, In April there was a 4.4% consolidated traffic increase in comparison to last year. US Airways Group Inc (NYSE:LCC) is in fleet-expansion mode and its revenues are bound to increase. Over the past few years, the U.S. airline industry has been on a partnering spree and it’s as if the only two remaining airlines just decided that they did not want to be the odd ones out. It seems like the only way out of easing off the financial commitment pressure is to have someone there to share it.

The merger has just received the Federal authority nod and once it is complete, should bring about some major changes in the industry, and be beneficial to travelers as well.  Only four carriers would be in control of 85% of the domestic market. This is in effect an end to a consolidation period that seems to have helped in transforming an industry that was chronically ill, into a profit-making proposition.

Post the 2001 terrorist attacks, empty planes, massive losses, soaring Jet-fuel prices and the ascendance of low-cost airlines such as Southwest and JetBlue was a major strain on the legacy carriers. Today, the new-found partnerships mean that there is less pressure to maintain lower fares and those may shoot up. However, alliances also mean that the mega-carriers are raking in the big bucks which enable them to upgrade services and their fleet. This automatically adds to the flying experience. Addition of more domestic routes is another plus for the national traveler.  At the end of the day, everyone flies happy.

About Kristi Scott

Kristi Scott joined GDP Insider in 2005 as a Wall Street reporter for the Business and Market section. Kristi covers the stock market, financial markets and personal finance. Her awards have come from the National Federation of Professional Writers, the Ohio Newspaper Association, the Cleveland Press Club, the Society of Professional Journalists and Suburban Newspapers of America. Kristi was named SNA's national Journalist of the Year

View all post by Kristi Scott Visit author's website

Write Your Comment