In an industry like this, overcapacity is particularly ruinous, and unfortunately for airlines, planes fly for a long, long time. It takes eons for attrition to reduce the number of planes in the air, especially since the old majors have multiple powerful unions that make cuts tricky. That's why you get serial bankruptcies--and CEOs who spend inordinate amounts of time lamenting overcapacity. It seems to be the airline CEO equivalent of talking about the weather.
But while, as Oscar Wilde noted, "everyone talks about the weather, but nobody does anything about it", United and US Airways have been for some time desultorily considering action, in the form of a merger. Now it appears that the merger chit-chat has heated up into preliminary "talks".
This makes business sense--it would give the two majors more pricing power, and let them streamline their staff. But that, of course, is itself a major obstacle. Regulators don't like it when airlines get pricing power, and unions don't like it when they cut staff. As the Wall Street Journal notes, "The airlines have flirted with mergers a few times in recent years. They aborted a deal in 2001 after unions protested and antitrust enforcers threatened to file a lawsuit to block a deal."
It's not clear why this time is supposed to be different--it's not like the Obama Justice Department is likely to be more merger-friendly than the same department under Bush. And even if they succeeded, they'd spend years negotiating with regulators and angry unions over things like slots, and seniority.
On the other hand, what else are they supposed to do? It's all very well to say that they need to manage their business better, but the business they're in isn't a particularly good one, and they're hampered at every turn from making the kinds of changes that would give them a sustainable business model. It seems that as a nation, we prefer serial bankruptcies and cheap, uncomfortable seats.
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