The Brancatelli File



January 18, 2001 -- I don't like this new world, this world where American gobbles up TWA, this world where American and United conspire to divide up US Airways, this world where they get an iron-clad lock on half the nation's air-travel system, this world where they fly off into the oligarchic sunset.

So, just for fun, how about you, me, Mr. Peabody and Sherman hop into the Way Back Machine? How about we set the dial for March, 1987? I think we'll find a way out there. I think we'll find a merger with which we can live. A merger that could save us from an American-United oligarchy. A merger that will create a meaningful new competitor, not extinguish two more major carriers.

Gee, Mr. Peabody, the aviation world of March, 1987, sure is a funny place...

At least for the moment, TWA has a measure of financial equilibrium, it still flies all over Europe and chairman Carl Icahn is hailed as a savior. USAir is a puny national poseur, but it dominates the East and it has just purchased PSA, a beloved West Coast carrier. And Piedmont is a much-admired regional airline with several strong hubs and the smarts to serve Krispy Kreme doughnuts on breakfast flights.

As it happens, Piedmont is hours away from executing a merger agreement with USAir when Icahn discloses he has purchased about 9 percent of USAir. How about I buy all of USAir and merge it into TWA, he suggests. Or how about USAir buys me out and takes over TWA, he hints. Or how about we do a giant TWA-USAir-Piedmont merger, he opines.

Listen to what The Wall Street Journal thought about 1987's potential mega-merger. "The combination would be the most logical and potent outcome. …It would link TWA's transatlantic system with USAir's strong domestic routes. The link would also give the new carrier a national presence: USAir's routes already blanket the densely populated Northeast and TWA controls a substantial amount of national traffic through its St. Louis hub."

By now, everyone from Rocket J. Squirrel to Bullwinkle J. Moose should be able to see where I'm going here. From out of the Way Back Machine comes a merger that would be good for competition today. The 1987 version didn't fly because no one trusted Icahn and because Ed Colodny, then chairman of USAir, had no vision.

Of course, TWA and US Airways today are not the airlines they were in 1987. But merging them made sense then and it makes wonderful sense now. It could fly. It would be profitable. It would give business travelers, corporate buyers and vacation flyers more choice. And it would block the American-United market-share grab.

TWA's fortress hub in St. Louis is efficient and it is a complimentary operational fit for US Airways' network in Pittsburgh, Philadelphia and Charlotte. TWA has been growing at Los Angeles and that expansion would be accelerated if grafted onto US Airways. TWA's growth at San Juan meshes with US Airways' East Coast network. Although it has abandoned most of the routes, TWA still holds the rights to fly throughout Europe, Asia and the Middle East. US Airways needs more international service and most of TWA's old routes could be freely diverted to the US Airways hubs. Suddenly, US Airways' ailing East Coast network would be feeding a worldwide web of flights, not just competing on a point-to-point basis with low-fare carriers like Southwest and JetBlue. Best of all, now that it is in bankruptcy, TWA's assets, routes and employees can be absorbed without assuming the airline's murderous ticket-sales agreement with and debt obligations to the rapacious and apparently eternal Icahn.

The combined TWA-US Airways could effectively compete for corporate sales against American, United, Delta, Northwest and Continental. It would have a terrific frequent-flyer program, offering destinations in Florida, California, Hawaii and everywhere from Tokyo and Hong Kong to Paris and Rome. It would have the high-profile East Coast Shuttle, nonstop transcontinental service and a rising Caribbean presence. And it would be a marvelous candidate for a new worldwide alliance with British Airways, which has been desperately searching for something better than Oneworld.

What about jilted suitors American and United? Well, give American chief Don Carty the Mr. Congeniality award for so suavely trying to work a deal that would have made American the big winner in a United-US Airways merger. As for United chief executive Jim Goodwin, tell him not to open his mouth again until he can make peace with his own labor unions and get at least seven out of every ten United planes operating on schedule.

Do I think any of this could happen? I guess not. But, you know, contemplating an aviation market controlled by American and United is like discovering you have to fly to Frostbite Falls next week and you're stuck in the middle seat between Boris Badenov and Natasha Fatale.

This column originally appeared at

Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.