US Air CEO: High fuel costs push mergers

Nov. 8, 2007 at 12:09 AM

NEW YORK, Nov. 8 (UPI) -- High fuel costs will prompt major airlines to merge as a way of controlling operating costs, US Airways Group Inc.'s chief said in New York Wednesday.

And if deal-making starts to happen, US Airways "will be in the middle of it," Chief Executive Officer Doug Parker told analysts at a Goldman Sachs Group Inc. industry conference.

With crude oil prices nearing $100 a barrel, air fares are bound to increase, Parker said.

Crude closed at $96.37 a barrel on the New York Mercantile Exchange Wednesday, with prices reaching as high as $98.62 before easing back.

"In today's environment, we believe there certainly is room for additional price increases," Parker said. But raising fares will be difficult, "if the economy goes into a softening mode.

"The industry is still extremely fragmented, which puts severe pressure on the financials in difficult times."

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