Yet Another Challenging Merger

OK, so it's starting to feel like beating the proverbial dead horse, but here's another post in a continuing theme on the challenges of mergers, featuring the 2005 US Airways and America West merger. Business Week discusses the difficulties the company has faced in creating a cohesive whole.

Company executives speak of an "east side," the former US Airways, and a "west." Even today, Parker has still not signed new contracts with his pilots, flight attendants, baggage handlers, or mechanics, which explains why labor is upset with the boss.

Employees operate under transitional agreements that specify, to the plane, which jets they can work on. If a former US Airways plane breaks down in Las Vegas, for example, the carrier can't switch the crew to a former America West jet, even if the aircraft are identical.

Two points in the defense of the merger. First, as the story points out, the combined company was profitable last year, earning $427 million on revenues of $11.7 billion. Second, even with the difficult merger, it's quite possible that the combined company is doing significantly better than if they had continued as separate airlines.