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Minority businesses would fight any US Air merger

By Todd Sperry, CNN
updated 2:46 PM EST, Wed December 5, 2012
STORY HIGHLIGHTS
  • African-American Chamber of Commerce concerned about potential job loss
  • US Airways and American could merge, but no proposal has been made
  • Philadelphia is a US Airways hub; airline and airport are major employers
  • Business leaders in Phoenix area, where US Air headquartered, also concerned

(CNN) -- African-American business leaders are concerned about the potential impact on jobs in the Philadelphia area resulting from any merger between American Airlines and US Airways, which operates a hub at the city's busy airport.

Members of the African-American Chamber of Commerce from Pennsylvania, New Jersey and Delaware have said a combination of the two airlines could threaten employment and small businesses in and around Philadelphia International Airport, one of region's largest employers.

"From our perspective, if US Airways merges with American Airlines, our fear is that the new airline could downgrade its Philadelphia International operations, which would mean fewer opportunities for minority and women owned businesses and their employees," Steven Bradley, chairman of the chamber, said in a statement following a Tuesday news conference.

The Chamber of Commerce said it plans to put pressure on Philadelphia Mayor Michael Nutter and local officials in the region to halt a merger, if it is eventually proposed.

Business leaders in the Phoenix-area, where US Airways is headquartered, also raised concerns recently about the potential impact of a merger on jobs.

The Philadelphia airport generates more than $14.4 billion in spending and accounts for more than 141,000 jobs in the Philadelphia area, according to airport data.

US Airways employs nearly 6,500 people at its Philadelphia hub, which handles about 10 million passengers annually on more than 450 mainline and express flights, according to the airline.

The airline's business generates $61 million in state taxes and $9.3 million in local taxes, the Chamber of Commerce said.

American, which is restructuring in bankruptcy, has a small presence in Philadelphia.

Neither side has committed to any merger proposal to create the world's biggest airline, but industry insiders have said previously that a deal would make sense for the companies, which have watched as their rivals have become stronger through consolidation.

AMR Corp, the parent of American Airlines, announced a partnership with US Airways in August to share private data on finances and operations, leading to more speculation that a merger might be in the cards.

American would not comment on prospects for a merger, saying only that it continues to evaluate its strategic options.

US Airways CEO Doug Parker previously has sounded optimistic about the possibility of a deal with American and touted a combined workforce of 100,000 employees.

Mergers often involve some shifting of operations, leading to job cuts in one location and potential employment gains for other areas.

If a merger is proposed between American and US Airways, the decision on whether it goes forward would rest with antitrust officials at the Justice Department, who have approved other big airline mergers in recent years despite some political concerns about the impact on cities and competition.

A prospective deal's impact on employment, however, is generally not a top consideration for any decision by the government to reject an airline merger.

Philadelphia itself has one of the highest poverty rates among all major U.S. cities, so any loss of good-paying jobs would be magnified.

The federal government's Economic Census of 2007, the latest data available, shows more than 22 percent of businesses in Philadelphia County are owned by African Americans.

Philadelphia International Airport serves some six million people who live in the Delaware Valley region, including the large metro areas of Philadelphia, Pennsylvania, Camden, New Jersey and Wilmington, Delaware.

The facility is in the midst of significant expansion with a master plan calling for $6.4 billion in improvements over 20 years.

The plan was approved by the Federal Aviation Administration in 2010 and supporters say it will bring increased air traffic capacity and make the airport more competitive.

But US Airways believes development of the master plan will come with a much higher price tag, and it is that cost and not merger speculation that has the airline evaluating the future of its hub in Philadelphia.

"We are concerned that escalating costs at the airport will potentially damage the future viability of our hub operation there," US Airways spokeswoman Liz Landau told CNN.

"Any growth at the airport needs to be implemented in such a way that maximizes airport efficiency and makes financial sense for US Airways," Landau said.

US Airways, she said, has a strong record of supporting local and minority owned businesses, adding the carrier would "welcome their continued inclusion in the bid process for any proposed future projects."

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