Report: US Airways could move headquarters - East Valley Tribune: News

Report: US Airways could move headquarters

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Posted: Monday, May 12, 2008 6:40 pm | Updated: 10:00 pm, Fri Oct 7, 2011.

Speculation on whether Tempe-based US Airways and Chicago-based United Airlines can complete a deal, when it might happen and what the merged carrier is likely to look like continues unabated this week.

The Chicago Tribune reported Sunday, citing an unnamed source familiar with the negotiations, that the two giants are close to an agreement that would form the second-largest U.S. airline, with US Airways' management team in charge but the corporate headquarters in Chicago.

US Airways won't comment on any topics under discussion, but analysts are far from agreeing about what may happen with a merger of the two major carriers.

Airline expert Bob Mann of R.W. Mann & Co. said it makes sense that if a deal is struck, US Airways CEO Doug Parker would take the reins, along with his entire management team.

"Parker and company are much more efficient," Mann said. "I don't think much of United (top management) would be left."

But Mann said he's not convinced that the company would be run from Chicago and, if it were, just how many of the administrative jobs would move there.

Mann said that even if Parker and other top management relocate to Chicago, administrative and support positions don't have to make the move.

"A lot can be said for not taking the low-cost, well-run operation and changing locations," he said.

Real estate is much more expensive in Chicago than in Tempe, he said. And the decision on a location just might depend on leases and when they expire.

US Airways would not reveal information about its Tempe lease.

The hometown airline has about 10,380 employees based in the Valley, spokeswoman Valerie Wunder said. That's a combination of administrative and operational positions. The operational slots include pilots, flight attendants, mechanics, ticket agents and others tied to operations at Phoenix Sky Harbor International Airport.

Just 2,191 of the local positions are considered administrative, Wunder said, and some of those may also be associated with Sky Harbor functions.

So even if Chicago lands the headquarters, Tempe's biggest loss may be the prestige of being home to an airline.

Tempe Mayor Hugh Hallman said he'd rather have the jobs than the prestige, "since they rarely mention headquarters location anyway."

"Glendale found that out with Super Bowl," he said.

While US Airways has been "a good community partner" with Tempe and the Valley and, because the bulk of the local jobs would stay put, that's unlikely to change even if the company's home base is in Chicago, Hallman said.

"Tempe's success does not depend on any particular employer," he said.

Mann doesn't envision any changes to the Sky Harbor operation if a merger is completed. While United has five hubs and US Airways has four (if Las Vegas las Vegas is included), there is no reason not to have that many "focus cities," as long as they are profitable, Mann said.

While frequency and capacity are likely to be reduced in a merger where routes overlap, that will mostly include flights from hub to hub, he said.

US Airways has about 186 flights a day departing Terminal 4 at Sky Harbor, and Mesa Air Group, flying regional routes as US Airways, has 88, said Deb Ostreicher, deputy aviation director.

That's nearly 20 percent of the busy terminal's business.

United has 70 departures a day, she said.

Likely losers in a merger would be the regional partners, Mann said. Those partners are small airlines that fly connecting routes under the banner of the major companies.

United and US Airways have eight to 10 between them, which may not be as needed with the bulk of a combined giant.

That could be bad news for Phoenix-based Mesa Air, a regional partner for both and already in danger of being dumped by Delta Air Lines, which is in the midst of a merger with Northwest Airlines.

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