Air Transport World

Muse Air makes bold moves before possible merger with Southwest. (Houston hub, Florida service, fleet reconfiguration)

Muse Air makes bold moves before possible merger with Southwest

"When you're in a position like Muse Air is, where you've never made a profit and are continuing to lose money ($17 million in 1984 and $5.2 million in the first quarter of 1985), you'd better do something--start innovating.'

Thus did Lamar Muse explain to Air Transport World his decision to take a series of bold marketing steps only a couple of months before his struggling carrier is due to be swallowed by its most formidable competitor, Southwest Airlines.

These steps, which were to be fully implemented on June 4, include:

Shifting Muse Air's primary hub from Love Field in Dalls--Southwest's stronghold --to Hobby Airport in Houston.

Launching service to Florida--making Muse Air a transcontinental airline.

Spending $1.6 million reconfiguring its six McDonnell Douglas MD-80s and seven DC-9-51s into a near 50-50 split between first-class and coach seating.

All of these actions, says Lamar Muse-- who reassumed the Muse Air chairmanship in December as a condition of a $16-million bailout of the ailing carrier by Dallas financier Harold Simmons--have a single objective: "To move Muse Air to the maximum extent possible away from being in direct competition with Southwest--and Continental . . . to try to segment a little different piece of the market.'

That objective is a familiar one in these deregulated days, but the timing of Lamar Muse's actions is rather startling. Southwest and Muse Air are in the midst of attempting to gain approval from the U.S. Department of Transportation for a takeover by Southwest of its four-year-old rival, a merger that they hope to complete by July 31.

Southwest's Chairman, President and Chief Executive, Herb Kelleher, is constrained by governmental regulations from commenting while the merger is pending on what Muse Air is doing, but he was willing to remark to ATW that the moves "demonstrate that there is absolutely no collusion between Muse Air and Southwest at all. . . Certainly we would prefer that everything had been left as it was until we took over so that we could have made those decisions. . .'

"Cadillac' carrier

Lamar Muse's effort to "segment the market,' however, seems to be in line with Southwest's own thinking. …

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