Airlines Look to Make Big Changes...

Three of America's largest airliners made huge headlines across the country todays.

Firstly, US Airways and America West announced today that a merger between the two (which are the 7th and 8th largest carriers in the nation, respectively) would be made in order to unite the two struggling airlines into a larger, stronger one. The new airline would operate under the title of "US Airways" still. The merger will be funded by $1.5 billion dollars in capital from a variety of new investors.

"The goal of the merger is to stitch together two geographically distinct carriers with a history of financial struggles into a stronger airline that would compete better with lower-cost rivals such as Southwest Airlines Inc. and JetBlue Airways Corp."

In the face of this news, Delta Airlines also made big news today with the announcement that it plans to cut costs by $1 billion dollars in order to achieve its goal of cutting costs by $5 billion dollars by 2006.

http://www.foxnews.com/story/0,2933,157060,00.html

"There is no area that will be safe from scrutiny," CEO Gerald Grinstein told shareholders at the struggling carrier's annual meeting.

According to John Malone, chairman of the Delta pilots union's executive committee, the pilots have done their part in reaching the goal by agreeing to a 32.5% pay cut last fall.

Delta shareholders also agreed to double the number of shares of company common stock to 900 million and reduce the par value of common stock from $1.50 to $0.01 per stock in order to give the airline greater flexibility.

In both cases, airlines are making decisions in order to keep out of bankruptcy and start churning profits in the face of rising fuel prices and competition in the low-fares market.