Officials: Merger won't kill Phoenix airline hub

Photo -   Travelers stand at the American Airlines ticket counter, Thursday, Feb. 14, 2013 at Sky Harbor International Airport in Phoenix. American Airlines and U.S. Airways announced their merger today which will create a mega airline with more passengers than any other in the world. (AP Photo/Matt York)
Travelers stand at the American Airlines ticket counter, Thursday, Feb. 14, 2013 at Sky Harbor International Airport in Phoenix. American Airlines and U.S. Airways announced their merger today which will create a mega airline with more passengers than any other in the world. (AP Photo/Matt York)

PHOENIX (AP) — The potential merger of US Airways and American Airlines raised fears in Arizona that the combined airline would ditch its major hub in Phoenix, costing thousands of jobs in a region just now recovering from the housing collapse and recession that crippled the economy for years.

But when the merger was announced Thursday, city and airline officials both said those worries were overblown.

US Airways CEO Doug Parker said Sky Harbor International Airport and the vast majority of the employees based there aren't going anywhere when the two companies merge. Instead, he said not only Sky Harbor, but the combined airlines' seven other major hubs will stay.

"Phoenix will be the primary western intercity hub, Los Angeles the primary international hub," Parker said after arriving back in Phoenix from a grueling day that began at 4 a.m. spent in American's home state of Texas. He assured a throng of reporters that he expected the Phoenix hub presence to be stable or even grow as the airlines consolidate.

That brought elation from officials in Phoenix, where 300 US Airways flights a day use 50 gates at the airport's largest terminal. US Airways has about 9,000 employees in Arizona, most at Sky Harbor. Between 600-750 work at the company's headquarters in nearby Tempe, and some of those are expected to go to Texas once the merger is complete, with Parker leading the way.

Any job losses are expected to be mainly in management, Parker said.

But John McDonald, the company's vice president for corporate communications, said US Airways just signed a five-year lease with a five-year option on its headquarters building and expects to keep hundreds of people working there.

American has a tiny presence by comparison, with just 20 departures a day using three gates in the smaller Terminal 3 and about 1,000 employees in the state. Those operations will most likely move to the US Airways area of Terminal 4 when the merger is complete, airport spokeswoman Deborah Ostreicher said.

Still, the loss of the headquarters is a blow, Phoenix Mayor Greg Stanton said, even though the city will see more international destinations added with the merger.

"It's great news that the world's largest airline will maintain Sky Harbor and Phoenix, Arizona as a hub. It's good news for the business environment in our entire region," Stanton told reporters at the airport. "But we're not naive, we're not naive, we know it's disappointing to lose a corporate headquarters, particularly one that has the history of US Airways and before that America West. We went through the 90s together, we went through Sept. 11 together. Phoenix was a big part of the recovery of America West after that tragedy."

America West Airlines, headed by Parker, merged with US Airways in 2005 and kept its corporate headquarters in Tempe. The company has struggled with combining its labor contracts, but McDonald said that's never affected customer service. That, he said, has become better, with improved on-time and lower baggage loss rates.

Some airline analysts questioned Thursday whether the combined company could keep all eight hubs, placing Phoenix on the short list for eventual closure. But McDonald said that's not the case, American's Los Angeles hub complements Phoenix, just as several hubs in the eastern U.S. complement each other.

"When you have an airport like Phoenix that can have a massive western region to feed, out of Phoenix, you have an asset to bring to this equation," McDonald said. "American Airlines has a lot of trans-continental out of Los Angeles, they also operate some Asian Pacific out of Los Angeles, with very little West coast feed into that hub."

Robert Mittelstaedt, a professor at Arizona State University's W.P. Carey School of Business and an aviation expert, said it's not out of the question that most of the merged airline's eight hubs could survive, because there isn't much overlap among the hubs. American, for instance, doesn't have as much of a presence in the Southwest as US Airways.

He said losing the hub would be a significant loss for Arizona, but he believes the Phoenix hub is — and could continue — seeing steady business from southern Californians who avoid Los Angeles International Airport and instead depart through smaller regional airports in their state and make a stopover in Phoenix on their way to the East Coast.

"I don't think just because the airlines are merging means that people will want to go to LAX any more than they are now," Mittelstaedt said.

Stanton said airline officials assured him that the company would continue supporting the arts and other philanthropic efforts in Phoenix.

Parker said the same.

"We're proud of our community efforts here in Phoenix and they'll continue," he said.

Very little is expected to change in the short run, because airline mergers can take more than a year. But US Airways' name will slowly be replaced, including at the US Airways Center in downtown Phoenix. Just exactly what replaces it hasn't been on the top of the list for the airline, Parker said.

Parker downplayed concerns that merging the two airlines — leaving just the combined American, United-Continental, Delta Air Lines and Southwest — will give those left standing free rein to raise prices.

"The industry's much more rational than it was 10 years ago," he said. "We have created an industry that is intensely competitive, but one that can do a better job."

— Associated Press reporter Jacques Billeaud contributed to this story.

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