While I suppose the strategy is to "sell" the merger this way, I am still unable to comprehend how anyone with more than a few functioning brain cells could believe it is a good investment. The concept of instantly creating a nationwide LCC similar in scope to SWA certainly sounds appealing, but the reality doesn't match the concept being pitched. Southwest has a single fleet type. The combined HP/US would have at least four type families (not including the regionals!), and the Airbus narrowbody fleets have different engine types. Integrating the two workforces may well make the AMR purchase of TWA look amicable. Standardizing policies, products, procedures, etc. between the two airlines will be expensive.
Southwest has a market cap of $12 billion because (1) they have been profitable for the last 32 years, (2) they possess assets worth a bit over $13 billion with roughly $4.8 billion in liabilities, (3) management has shown that they are able to control costs while maintaining good employee relations, and (4) their business model has been proven to work in good times and bad.
America West has made a profit in one year of the past five. US Airways' only profit in the last five years came as a result of discharging its liabilities in the first bankruptcy. The combined entity would still owe roughly a billion dollars on ATSB-guaranteed loans. What specifically would be "different" about a combined HP/US that would allow it to make a profit? About the only things they have in common are some of the lowest pay rates among the network carriers -- and neither is profitable! America West's first quarter profit came largely on mark-to-market gains on fuel hedges for future quarters.
It would take a heck of a lot more than a whizzy PowerPoint presentation to convince me that this dog would hunt. For some reason, I think a lot of potential investors tend to ignore how deftly airline labor unions tend to throw a monkey wrench into the integration machine.
I personally am stunned that any money manager would be dumb enough to throw any appreciable sum of money at this merger. I can easily understand why AWAC and Republic put money into US Airways; AWAC needed an exit strategy and bargaining chip with UAL, while Republic stood to gain the MDA business and a slew of slots (and their commitment to the reorganization plan was nebulous at best). GE's motivation is obvious, but it is interesting to me that GE is unwilling to directly risk any of its own funds so far. I suppose Bronner could try to save face, since the value of RSA's investment in the first reorganization was basically wiped out as a result of the second bankruptcy.
I still do not see, however, how combining a bankrupt non-LCC with a struggling sort-of-LCC creates this "nationwide LCC" to rival Southwest. It just does not add up, even if you drop half a billion into this hare-brained scheme.
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:blink: 
