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Nexa Capital airline analyst Ray Neidl on the American Airlines, US Airways merger's impact on the airline industry.
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Well our next guest says the merger American and US Airways would be the last step of airline restructuring began.
A whopping 35 years ago now when the industry was first deregulated.
And we are joined now by next -- capital airline analyst ray Knight -- Great thanks for being with us I read on Forbes commentary this morning said -- might airline prices rise to depress the price 10% of this merger.
If that were true there's no way the Obama administration would approve this right they're interfering in merger talks all -- It's going to be very difficult to stop this merger from the department just as you point there's very little overlap the system is complementary.
Fear is probably from up.
With this.
Merger.
But that's just -- strength in the industry.
As we have rationalizations seats and -- and smokes.
But.
Further it traveler we've yet to find an airline deal that work to our benefit.
I mean right from UAL continental delta and northwest we've seen prices go up -- get lost.
And a lot of disgruntled passengers are we gonna see the same.
Well the hard part for US Airways begins now.
Integrating these two Systemax.
And as far as the stock goes.
Been telling people.
By on anticipation of the merger an announcement itself and we seen that happen today it's gonna be rough one to two years as they try and integrate these two diverse as systems.
Long term -- will be beneficial for everybody.
Remember a couple of years ago when -- airline ticket prices were cheaper the -- are losing money.
You have to have an industry that makes money if you -- long term viable.
-- system.
-- now their routes are not overlapping at all they're actually complementary which means they don't have as much.
Market power to raise prices on their routes do that that that's correct there's very little overlap.
What will happen though is you have a further radicalization in DC capacity.
-- this merger.
You we were just talking about how this is pretty much the last the consolidation isn't it there's nowhere else to go here.
Now this is pretty much the end of that I started my career out of a graduate school with deregulation.
And it took over thirty years and finally we finally have.
-- the end of the road as far as deregulation does.
The only the only thing that could happen now is of congress changed the international investment laws I don't expect that to happen to -- -- -- Probably allow foreign buyers of the London right -- -- and income solid still some more.
OK well and as much as we complain we pay 25 dollars -- back thinking.
In fact is air fares are vastly lower now than they would would be if we had never deregulated true.
Inflation adjusted -- vastly cheaper actually -- the thing is we have to pay for your bags you're paying for what she gets some people don't carry -- And they -- be -- to subsidizing people that -- -- all right thank you very much for being with us rate I don't think the big deal that it.
