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American and US Airways network questions remain

American and US Airways executives say that the combined carrier will retain all of its existing hubs, but note that changes are possible.

The new American will be based in Fort Worth, Texas, with hubs or focus cities at Charlotte, Chicago O'Hare, Dallas-Fort Worth, Los Angeles, Miami, New York John F. Kennedy (JFK), Philadelphia, Phoenix and Washington National.

"We're not at a point where we can talk about network rationalisation because we're not at a point that we can do so," says Tom Horton, chairman and chief executive of American, during an investor call today. "Our plan is to maintain all of our hubs."

"[But] markets change and we will do what brings the greatest return for our shareholders," he adds.

Delta Air Lines significantly cut back operations at Cincinnati and Memphis following its merger with Northwest Airlines in 2008, despite statements that it would maintain all of the carriers' hubs prior to the deal. United Airlines has maintained all of its pre-merger hubs since its deal with Continental Airlines closed in 2010.

Analysts have speculated that while most of the combined American and US Airways hubs make sense - for example, Dallas-Fort Worth as a mega-hub serving east-west flows and international traffic, JFK as an originating and departing international gateway and Philadelphia as a domestic hub catering to the northeast - its operation in, for example, Phoenix may see some cut backs due to overlaps with other hubs.

"Overlap is just fine," says Andrew Nocella, senior vice-president of planning and marketing at US Airways.

"What we're looking for is profitability," he adds, echoing Horton's earlier comments.

Doug Parker, chairman and chief executive of US Airways, says that the airline will maintain a "significant corporate and operational presence in Phoenix", in a letter to employees today.

"[The merger] is built on the notion that we're going to build and expand our existing hubs," says Horton.

Asia will be a gap in the merged carrier's network. Moody's Investor Services says that its international network will lag those of Delta Air Lines and United Airlines due to this gap, in an issuer comment today. The rating agency notes that US Airways brings "no new routes to American's Pacific franchise".

"It's still not where we'd like it to be," says Derek DeCross, vice-president of global sales at American, on the combined network across the Pacific. He adds that American has a "de facto very strong network into Asia" with its immunised joint venture alliances with Japan Airlines to Japan, and with Qantas Airways to Australia.

Nocella adds: "We're going to work hard to fill that gap over time."

Despite this limitation, passengers see the combined network as a "huge benefit" of the merger, says DeCross. He says that he has been receiving only positive customer comments from his sales team around the world since the merger announcement this morning.

US Airways will continue with its planned 3% capacity increase this year, says Parker. Horton declines to comment on growth at American.

The airlines combined orderbook of 607 mainline aircraft will remain in place. American is slated to receive 59 new aircraft and remove 57 from its fleet this year. US Airways will receive 23 aircraft and remove 21 from its fleet.

The status of American's capacity purchase agreement with Republic Airways for 53 Embraer 175s is unclear. Horton declines to comment on the impact that the merger will have on the deal, saying that the airline is "still working through that".

Republic is slated to begin flying the 76-seat regional jets for American in the second half.

The new American will operate 6,700 daily flights to 336 destinations worldwide and carry more than 170 million passengers per year. It has a combined mainline fleet of 948 aircraft.

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