Enjoying your dose of Cranky? Subscribe now to get each new Cranky post in your inbox for free.


The American/US Airways Merger is Finally Complete; Now It’s Time for the Hard Part

Today, American and US Airways complete their merger. You would think that after such a long time, this would feel like the end of something huge, but it’s the opposite. This is the beginning of the real work that needs to be done — bringing the airlines together — and it’s not going to be easy. (Just ask United.)

US Airways American Heritage Logo

The merger being completed means a lot of things. It means that Tom Horton and friends are now off counting their money while Doug Parker and his team get to dig in. It means silly lawsuits or federal challenges can no longer threaten to derail the merger. And it means that American is no longer a bankrupt company. But in the eyes of the traveler, that doesn’t mean a whole heck of a lot.

In fact, absolutely nothing has changed in the eyes of the traveler and won’t for the next month. The airlines have deliberately held off doing any kind of integration work publicly until after the holidays because they don’t want to mess anyone up during that time.

January 7 is the first day when things will start to change. I believe we’ll hear a lot more about future plans that day, but at the very least, we’ll see the ability to earn and burn miles across the two frequent flier programs. And elites will get reciprocal benefits. Codesharing will follow. Then we’ll see US Airways leave Star Alliance and join oneworld. Eventually, we’ll get to D-Day. That’s the dreaded day when they switch to a single reservations system. That day, when the “US” code disappears, is really the day that I consider to be the biggest milestone from a customer perspective. It’s like the capstone officially acknowledging that the structure has been built.

But I’m getting ahead of myself. Up until this point, my interest has centered around why the merger is a good idea. But now that it’s done, it’s time to shift to analyzing how well they handle the integration. I’ll reiterate (and rephrase) a few points I made back in February, the day the merger was announced, about how not to screw this up.

Be American With a Healthy Dose of US Airways
The management team comes from US Airways but they need to quickly get into the mindset that they are now running one of the great global airlines. I really don’t think this is an issue – there has been plenty of time to plan for this and President Scott Kirby is already talking the talk – but it can’t hurt to repeat it. At the same time, don’t lose a lot of the forward-thinking that made US Airways so successful.

Focus Marketing on the Employees
Every merger is a pain in the butt for all involved. For that reason, it’s not time to crow about anything externally. It’s time to put your nose down and make sure everything runs as well as possible (and not like the last few days in ice-laden Dallas/Ft Worth). There is nothing to brag about right now, because nothing has been done from a public perspective. On the flip side, employees need to know as much as possible. Mergers are really stressful, and there’s always uncertainty in the process. Management should focus all efforts on keeping employees engaged until an external campaign has some really positive news to talk about.

Get Rid of the Bad Parts of the Old American
Even though I said the US Airways management team needs to start thinking like American, it needs to think differently than previous management teams at the airline. There was a lot of bad preventing American from succeeding over the last decade, and that needs to disappear. A cultural change like that is hard, but it is crucial.

Finish Labor
This merger has a tremendous head start on others since labor is so incredibly supportive. Now the labor groups need to come to agreement on seniority and put this into place. There’s no doubt we’ll see labor strife down the road (this is an airline, after all), but hopefully that won’t disrupt the integration from happening in a timely manner. So far, the skirmishes we’ve seen haven’t been a threat.

Craft the Network
Of course there will be a focus on growing revenue, but a key piece of that is building a competitive network. That is undoubtedly going to mean cuts in some places, additions in others, and shifting of resources all around the network. We’ll see all the hubs remain in some form for at least a few years, but they will end up looking different after the network has been rebuilt.

Do Tech Right
I’ll end with one last note. We saw it with US Airways/America West and it’s been a bigger nightmare with United/Continental. Don’t rush the tech transition, especially the reservation system combination. Just make sure it’s done well. Take all the time you need. Just don’t mess it up.

Congratulation to what is now American Airlines Group and to Doug Parker, Scott Kirby, and the rest of the team for joining United and Delta as one the three surviving global US airlines. Now it’s time to get out the microscope and analyze every move. This is going to be fun.

There are 47 comments Comments


Your email address will not be published. Required fields are marked *