- Aug 20, 2002
[FONT size=+1]AMR Chairman: Rivals'' Alliance May Benefit Co In Short Term [/FONT][BR]NEW YORK -(Dow Jones)- The chairman of American Airlines parent AMR Corp. ( AMR) suggested Thursday that, if approved, the proposed code-share marketing alliance among Delta Air Lines Inc. (DAL), Northwest Airlines Corp. (NWAC) and Continental Airlines Inc. (CAL) may benefit American in the short term.
[P]While it troubles us in the long term, in the short term we see this as a diversion, quite frankly, for the three carriers, said Donald Carty, AMR''s chairman and chief executive, during the Salomon Smith Barney Transportation Conference broadcast on the Internet.
[P]Carty suggested that the process of merging reward programs, airport lounges and the like will be costly and time-consuming for the carriers. Among other things, the three carriers plan to have a code-sharing relationship which allows each carrier to sell the others'' seats as if they were its own. The move is a reaction to the similar partnership struck recently between UAL Corp.''s (UAL) United Airlines and the bankrupt US Airways Group Inc. (UAWGQ).
[P]We''d rather be focused on things that can make substantial, measurable change in our financial condition, Carty told investors.
[P]Some of the nation''s smaller carriers, including America West Holdings Corp.''s (AWA) America West Airlines, are opposing the partnership among the nation''s third-, fourth- and fifth-largest carriers, saying it would spur industry consolidation and allow a small number of airline alliances to dominate aviation.
[P]However, Carty said that Delta, Northwest and Continental would never be allowed to merge into one carrier. I think they remain fragile, he said.
[P]Still, over the long run, Carty said American, the world''s largest carrier, needs to react appropriately should the alliance wins regulators'' approval.
[P]Carty also said that he hopes the industry will have a better way to solve labor disputes in the future than the current system. Currently, the Railway Labor Act allows for a long process of federally mediated talks, sometimes culminating with presidential intervention. Under that system, Carty said many of the past labor disputes have resulted in work slowdown or travel disruption.
[P]The recent Republican sweep in Congressional elections has raised hopes that the government may side with airline management in labor disputes.
[P]Carty said American still believes it needs to reduce its structural costs by $3 billion to $4 billion annually to be competitive. The Fort Worth, Texas, carrier has identified more than $2 billion in potential savings but needs to take out another $1 billion to $1.5 billion, the executive said. [BR]------------------[BR][FONT face=Arial][EM]I guess this means Carty and crew, rather than get their own house in order, intend to just sit back and hope the other carriers fail instead.[/EM][/FONT][/P]