Written by Phil Cerroni
By Phil Cerroni
After more than a year of getting to know each other, talks and tiffs, AMR Corporation, the parent company of American Airlines, Inc., and US Airways Group, Inc. formally announced their intention to merge on Valentine’s Day. Love was in the air at DFW Airport as representatives of both sides described the union, which will have an implied combined equity value of approximately $11 billion.
Don Jensen, an AA veteran of almost thirty years who is still has strong ties to the airline, agreed to share his experience, insights and predictions concerning the future of his beloved company.
The first question Jensen addressed is one that often leaps into the minds of thrifty, prudent or downright hypochondriac travelers: how will the merger affect their ticket price?
“[I am] fairly cautiously pleased with the way things are going,” Jensen said. “When all this wrinkles out, I’m hoping that Delta and United achieve a seat-mile cost that is lower than Southwest’s, and I think that we have the same opportunities … American was suffering from a [bigger] cost disadvantage than all the other players in the field. Hopefully this new reorganization is going to address that seat-mile cost.
“It’s a price sensitive world that the airlines live in. That seat is sitting there – when they close the door, it’s absolutely worthless – If it’s not filled then you can’t go back and get anything out of it later.”
With new routes around the world opening on what seems like a weekly basis, Jensen is positive that American is preparing to blaze its fair share of new trails.
“International operations are a very important part of today’s airlines, and DFW is one of American’s strongest hubs. Our location in the region and in the country is absolutely tremendous,” he beamed. “I think we’ll be stronger in our gateway to South America. US Air is going to add to that, and we’re one of the strongest carriers down there now.”
The merger is also good for employees, an important first step for what Jensen predicts will be an amiable redistribution of power.
“Our pilots’ group [is] looking at it as a pretty positive step. We feel that this merger is going to probably achieve one of the better integrations of the employee groups,” Jensen said. “The agreements they’ve worked out with the management at American and US Air has … turned [out] slightly better than it appeared it was going to.”
The benefits don’t just flow to the airline’s customers and employees, however. AA’s massive expansion should pump more capital into the DFW area.
“DFW Airport provides just in the neighborhood of $17 billion a year for the region – it’s the most significant revenue generator in our region,” Jenson said. “American Airlines has been, along with Eagle, over 70 percent of the operations there, and under the new arrangement I think it will be closer to 80 percent.”
These expansions will not come without some growing pains, however.
“It’s not going to be a simple process – it’s not over,” warned Jensen. “As a matter of fact, the two carriers are gonna be operating independently [for a while] – I don't think the ink on these contracts [is] going to be finished till sometime in the latter part of this year. I think integrating employee groups is difficult. American experienced concerns in employee groups with the TWA, acquisition and [the] merger.”
Jensen also hinted that the complex task of shuffling the airline’s new slots may develop into a sticky situation.
“You can only have so much traffic at a place like Washington National or LaGuardia. Slots are what they call your ability to come in at 10:00 in the morning with an airplane, have a gate and leave. [It] is controlled because there are a limited number of entryways through New York City or Washington airspace, just like there is here.
Jensen closed the interview by exhorting North Texans to be grateful for what AA has done for the region and to be supportive of its future ventures.
“I don’t believe that the general folks in the region realize what a jewel it is to have a company like American – a big carrier … that’s a strong link for both domestic and international operations – working here. As a headquarters company, it [is] really positive for our region.”