• The New York Times, Tuesday, May 6, 2008 10:02 AM

The prospect that United and US Airways might combine pleases Gary C. Kelly, CEO of Southwest Airlines. He says that the prospect of the two hub-and-spoke carriers cutting back flights to reduce costs--as well as the likelihood that such a merger could result in a period of operational chaos--would give Southwest an opening to seize yet more market share.

To politicians who worry that domestic competition would suffer if United and US Airways merged, Kelly says, "We can put those fears to rest." He says Southwest would quickly move in to expand service. Neither US Airways nor United spokespeople would comment on merger talks.

Kelly says his own interest in an acquisition--tepid to begin with-- has all but vanished because of rising fuel prices. "We've done a lot of contingency planning" as oil has soared toward $120 a barrel, sending the airline industry deep into the red, Kelly says. Southwest is alone among major airlines in having most of its fuel costs hedged at lower prices--70% of its needs at $51 a barrel for 2008.

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