US Airways Anticipates Shift To AA Res System

Following its 2005 merger with America West, US Airways converted its passenger services system from Sabre to Shares, then owned by EDS. If its merger with American Airlines is consummated, US Airways could be returning.

Look no further than United Airlines to see that transitioning to a single passenger services system is among the most complex tasks in an airline merger. That is not lost on US Airways CEO Doug Parker, who acknowledged his share of res system complications when integrating America West.

Unlike the United and America West cutovers, Parker today said he is applying the following principle to res technology: "It's much easier to take the larger airline's system to put those in place at the smaller airline than it is to do that the other way around."

That goes for more than just the passenger services system. "The ingoing premise would be that you'd see most American systems put in place at US Airways, unless there's a really compelling reason not to do that__and there may be compelling reasons, and we may find those as we go forward," Parker said during a call with analysts to discuss the proposed merger.

AA vice president of global sales Derek DeCross today told The Beat American continues "down the path" of its own res system upgrade to "make sure we come out with a product that's world-class."

AA for years worked with Hewlett-Packard, which now owns Shares, to build a new passenger services system, but that project crumbled, culminating in a June 2012 request by AA of the court supervising its bankruptcy case to approve a mutual termination agreement. The carrier during its Chapter 11 restructuring determined that it would be best to buy a new system rather than build one with HP.

AA in October last year extended by at least two years to June 30, 2016, the expiration date of its passenger services deal with Sabre. As part of the settlement of its lawsuit with Sabre, AA also agreed to give the travel technology firm an unspecified period of exclusivity to negotiate a new res contract, during which it will "not solicit, discuss or negotiate with any party other than Sabre," according to a bankruptcy court filing.

If all goes according to plan, Parker, who is slated to assume the CEO role at American, expects to transition to AA's system before that contract expires.

Parker said he expects the merger to close in the next six months, after which the carriers would spend about 18 months becoming one, a timetable that includes the passenger services integration.

While JP Morgan analyst Jamie Baker today noted that "United-Continental went from zero to merger in record time," they also "failed to adequately contemplate labor and IT challenges."

Following United's cutover from a Travelport-powered passenger services system to Continental's Shares system, customers encountered unsynced passenger name records, missing itineraries, check-in issues, frequent-flyer mileage accrual problems, upgrade difficulties and long hold times to speak with customer service agents.

Baker noted that he expected a smoother ride for AA and US Airways.

Parker said systems integration is only one component of merging passenger services. "Indeed, it is about systems," he said, "but the real issue is the processes that those systems drive, [which] is where you can get yourself caught. For US Airways and America West, our reservations system integration was not an issue at all__the system worked well. The problem is the reservations system drives all sorts of processes throughout the airline. It was harder for the large airline to learn all those new processes. It caused us some issues that we probably wouldn't have had if we went the other way."