Airline merger threatens U.S. airports' credit quality: Moody's
WASHINGTON (Reuters) - The merger of American Airlines and U.S. Airways to form the world's largest air carrier threatens the credit quality of U.S. airports, Moody's Investors Service said on Tuesday, as the combined airline may eliminate routes or push up ticket prices.
American Airlines parent AMR Corp AAMRQ.PK, which filed for bankruptcy in November 2011, said last Thursday that it will merge with US Airways Group (LCC.N).
The three major hubs for the airlines - Texas Dallas-Fort Worth International, Miami International, and Charlotte Douglas International Airport - could suffer from the merged company combining its operations, according to the Moody's special comment.
"The key risks for those airports are that the combined carrier may reduce service on overlapping routes or reduce service to markets connected by these hubs," the rating agency said. "Such capacity reductions give airlines a greater ability to raise fares, which in turn can result in lower passenger volumes."
Airports' revenues "are highly dependent on passenger volumes." In the past five years, the number of airlines has been cut in half, Moody's added, leaving airports exposed "to an increasingly concentrated pool of airline counterparties."
Smaller airports that were dominated by the two separate carriers, such as California's Fresno-Yosemite Valley Airport, face greater risk from the fewer airplane landing fees, terminal concessions, and parking fares as the number of passengers passing through could shrink from the consolidation, it said.
"When coupled with difficult economic conditions, airline mergers exacerbate the negative pressure already being exerted on U.S. airports," Moody's added.
(Reporting by Lisa Lambert; Editing by Nick Zieminski)
NEW YORK - Stocks advanced modestly on Monday after positive Chinese trade and inflation data, while remarks by top Federal Reserve officials about the outlook for slowing the Fed's stimulus had little impact on the market.
SAN FRANCISCO - At Pinterest, the four-year-old online bulletin board service that is valued near $3.8 billion, some 70 percent of the users are female. But the company's board of directors is 100 percent male. | Video
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.