This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
US Airways' bid to take over Delta Air Lines is a stunning move for a newly revived carrier that came within an eyelash of liquidation two years ago.
Even in the passenger airline industry, where jarring reversals of fortune are commonplace, the US Airways transformation from deathbed to potentially the world's largest passenger carrier is remarkable for its speed, daring and historical sweep.
Previous combinations have sought to link different but complementary airline networks and fleets. This one aims to pare overlapping routes, trim capacity by 10 percent - particularly in hyper-competitive East Coast markets - and use Chapter 11 to hammer costs.
Such an acquisition would have been unthinkable before the terrorist attacks of 2001, recession and last year's fuel price spikes led to ruinous airline losses. Delta, traditionally the bluest of airline blue chips with the industry's strongest balance sheet, fell into Chapter 11 last year and lost control of its own destiny.
Instead of being directed by shareholders, decisions about Delta's future hinge on creditors and a bankruptcy court judge in New York.
The blueprint for the Delta takeover attempt comes straight from America West's successful acquisition of US Airways last year. Plagued by chronic losses, labor strife and poor customer service, US Airways resorted to Chapter 11 in 2003 and 2005, and came close to liquidation.
America West, a low-cost, regional carrier based in Tempe, Ariz., stepped in at the 11th hour and took the novel step of purchasing US Airways in Chapter 11. Under court protection, US Airways slashed employee pay and benefits, canceled pensions, tore up leases and slashed costs.
When it emerged, the combined airlines flew under the better-known US Airways banner.
America West, the first U.S. carrier to seek a federal bailout after 9/11, said last year it was desperate to make the US Airways purchase because it was hemmed in by larger, more powerful carriers like Southwest and Chicago-based United.
United was cutting its own costs in bankruptcy court, and once America West lost its price advantage, larger rivals could force it out of business.
Today's US Airways is America West in all but name.
US Airways' former headquarters in Arlington, Va., has been cleared out, and America West managers hold most of the company's top positions.
The combined carrier defied industry precedent by making one strong carrier from two weak ones. US Airways has posted consistent and improving profits since emerging from bankruptcy court protection, and its stock price has more than doubled.
US Airways officials hoped the Delta acquisition would follow a similar script - but Delta wants to remain independent, and managers have signaled they intend to fight the merger. But their fate is largely in the hands of others.
The U.S. Justice Department, which consistently opposed large airline mergers in the 1980s and 1990s because they diminished competition, may be less likely to resist now that airlines have been devastated by years of deep losses and consumer fares have fallen in the last 20 years in inflation-adjusted terms.
Robert Mann, an aviation consultant, said US Airways could satisfy the concerns of regulators by giving up a few routes and gates at airports in Boston, New York and Washington.
But Michael Boyd, a Colorado airline consultant who represents small cities in air service issues, disagreed, saying regulators will reject the takeover as anti-competitive.
"Look at the route maps," he said. "It's a huge overlap."
The unsolicited takeover attempt was engineered by Doug Parker, 45, the youthful, outwardly laid-back US Airways chairman and chief executive who joined America West in 1995 and spearheaded the US Airways takeover. The new US Airways quickly abandoned its Arlington, Va., headquarters, and industry experts say they expect a reinvented Delta would be based in Tempe, a Phoenix suburb.
Also unclear was the fate of connecting hubs in Charlotte, long US Airways' biggest East Coast hub. Parker said the combined airline would continue to fly out of Atlanta's Hartsfield-Jackson International Airport, consistently among the world's busiest passenger airports with five parallel runways, European and Latin American connections and hundreds of millions of dollars in planned upgrades.
A US Airways takeover would, for the first time, put nearly all of Hartsfield's scheduled passenger flights in the hands of absentee owners. AirTran, a distant second to Delta in daily passenger flights, is based in Orlando; ASA is owned by Salt Lake City-based SkyWest; and Delta subsidiary Comair is headquartered in Hebron, Ky.
US Airways had apparently been considering a takeover attempt of either Delta or Northwest, both in Chapter 11, for months.
The two carriers filed for bankruptcy court protection on the same September day last year - and the US Airways management team has proven it can use Chapter 11 to slash costs and overhaul routes while preserving its own stock value and keeping control from courts and creditors.
The reorganizations "present an opportunity that may not exist for a long, long time," US Airways CEO Parker said in a June interview. "We can't ignore it. It's too big a deal, and it may not come around again."