American, US Airways close to merger

“It does not mean we are merging — it simply means we have agreed to work together to discuss and analyze a potential merger,” US Airways CEO Doug Parker said in a letter to employees Friday.

Such a merger would put the combined airline on par with the world’s largest — United Continental Holdings Inc. — and the slightly smaller Delta. Its position as the No. 1 or No. 2 airline in the world, based on how many miles its passengers fly, would depend on how many routes anti-trust regulators force the combined airline to abandon.

Delta, whose buyout of Northwest in 2008 led the recent round of consolidation, declined to comment on the development.

A combined American and US Airways could create a larger, more formidable competitor.

But airline consultant Bob Mann said it might open the door for Delta to eventually express interest in acquiring American’s Latin American division.

Delta and other airlines have also said further consolidation is a positive even if they’re not part of it. Airline mergers can reduce the number of big carriers other airlines are up against.

“I think Delta is kind of in the catbird seat here,” Mann said. “They don’t have to play a hand if they don’t want to, and when they choose to, they’re in a real good position to do it.”

Many industry experts say the only way American and US Airways can compete with larger rivals is by merging. US Airways would gain American’s lucrative international routes while American’s larger hubs would be fed passengers from US Airways’ network in smaller U.S. cities.

Parker - who once pursued a merger with Delta but was rebuffed - has been aiming for a deal with American since parent AMR Corp. entered Chapter 11 bankruptcy protection last year. American CEO Tom Horton has said his airline is weighing several options.