wnbubbleboy
Veteran
Southwest Chief Executive Gary Kelly, due in Phoenix today for a CEO panel at an international aviation symposium, isn't saying much about the airline's strategy. He's fond of saying Southwest likes to keep its powder dry until the last possible minute. But in an interview with The Arizona Republic on Wednesday, he made it clear the much-discussed merger talks are high on Southwest's radar.
"America West's our largest competitor in terms of overlap," he said. "And, strategically, we are trying to grow in Philadelphia," a US Airways hub.
Interview excerpts:
Question: Were you surprised the two are in merger talks?
Answer: I wasn't surprised in that (America West CEO) Doug Parker has made it clear that it's his opinion that consolidation needs to take place in the industry and that they intend to be a player.
Q: Size up the competitive threat a combined America West-US Airways would pose to Southwest.
A: They are both certainly able competitors, but I think everyone recognizes that their costs are higher than ours and in US Air's case, are much higher than ours. The notion that they would become a large low-cost competitor to Southwest Airlines, I would resist that argument. The fact of the matter is there aren't many carriers close to us yet (in costs).
Q: Do you think this deal can fly financially?
A: Just adding the two route systems together doesn't fix the cash-burn problem that the two carriers face. I don't know who would be willing to put money in, beyond the kinds of players that we've seen to date around the industry, whether it's a supplier like General Electric or whether it is an affiliate, like regional airlines.
Q: Are you preparing any kind of offer for US Airways assets?
A: We've got to be on our toes. We'll certainly evaluate any options that we might have for Southwest Airlines, but beyond that, I wouldn't have any comment.
Q: What would be your primary interest?
A: If we have (growth) opportunities without the assets, then that's what creates the sense of urgency on our part to try to participate in something like this. We don't have gates available to us yet in Philadelphia. That's what our interest would be, is in trying to acquire primarily some airport facilities.
Q: Why not make an aggressive move now, heading off any offer America West might make?
A: If you believe all the media reports, their interest is in pursuing a (merger) deal with America West. ATA put itself up for sale, and that was an auction. That has not happened with US Airways. If they put them up for sale, then obviously we would show up and no doubt be a bidder on assets, and I'm sure others would.
"America West's our largest competitor in terms of overlap," he said. "And, strategically, we are trying to grow in Philadelphia," a US Airways hub.
Interview excerpts:
Question: Were you surprised the two are in merger talks?
Answer: I wasn't surprised in that (America West CEO) Doug Parker has made it clear that it's his opinion that consolidation needs to take place in the industry and that they intend to be a player.
Q: Size up the competitive threat a combined America West-US Airways would pose to Southwest.
A: They are both certainly able competitors, but I think everyone recognizes that their costs are higher than ours and in US Air's case, are much higher than ours. The notion that they would become a large low-cost competitor to Southwest Airlines, I would resist that argument. The fact of the matter is there aren't many carriers close to us yet (in costs).
Q: Do you think this deal can fly financially?
A: Just adding the two route systems together doesn't fix the cash-burn problem that the two carriers face. I don't know who would be willing to put money in, beyond the kinds of players that we've seen to date around the industry, whether it's a supplier like General Electric or whether it is an affiliate, like regional airlines.
Q: Are you preparing any kind of offer for US Airways assets?
A: We've got to be on our toes. We'll certainly evaluate any options that we might have for Southwest Airlines, but beyond that, I wouldn't have any comment.
Q: What would be your primary interest?
A: If we have (growth) opportunities without the assets, then that's what creates the sense of urgency on our part to try to participate in something like this. We don't have gates available to us yet in Philadelphia. That's what our interest would be, is in trying to acquire primarily some airport facilities.
Q: Why not make an aggressive move now, heading off any offer America West might make?
A: If you believe all the media reports, their interest is in pursuing a (merger) deal with America West. ATA put itself up for sale, and that was an auction. That has not happened with US Airways. If they put them up for sale, then obviously we would show up and no doubt be a bidder on assets, and I'm sure others would.
