America West Airlines' takeover of bankrupt US Airways is crucial to enabling the combined carriers to turn a profit amid record high fuel prices, America West's chief executive said on Tuesday.

"As oil goes up, it just makes the merger more important," CEO Doug Parker said in an interview on a cross country flight to exhibit the combined carrier's new livery, which uses US Airways' name but is mostly white with red and blue accents rather than the current mostly navy blue design.

The deal, which the airlines say will create the largest US low-cost carrier, will improve the new company's pricing power, as well as that of the stricken airline industry by removing excess capacity, Parker said.

"It's an extremely difficult time for the airline business," he said. "There are too many seats in the market for the industry to fly profitably in this cost structure."

America West, the No. 8 US carrier, announced in May that it would join with a group of investors to buy US Airways, the seventh-largest domestic airline.

The combined company will achieve cost savings partly from staff reductions and by reducing its fleet by 60 planes.

But Parker said it will be some time before the two airlines -- which will initially operate separately and create an alliance to coordinate scheduling and frequent flyer programs -- are integrated top-to-bottom.

"It will be a while before we get a really integrated pilots work force, flight attendants work force," he said.

The deal, which has already cleared key regulatory hurdles, still must gain the approval of shareholders on September 13. Parker said the emergence of US Airways from Chapter 11 is another prerequisite for closing.

US Airways hopes to step out of court protection and close the merger, valued at more than USD$1.5 billion, in late September or early October.

Parker said little about how the new airline, which had planned to make money with oil priced at USD$50 a barrel, could turn a profit at current prices of USD$65 a barrel or higher.

Buying contracts that lock in jet fuel prices will be part of the solution, he said. America West tries to hedge 50 percent of its fuel needs six months to a year in advance and hopes to get US Airways on the same program, he said.

The airline industry has been rocked by soaring fuel prices and low-cost competition. Because of their low expenses, discounters like Southwest Airlines have fared better than larger carriers.

US Airways's second quarter results swung to a USD$62 million loss from a year-year profit, while America West's profit rose nearly 30 percent to USD$13.9 million.

The updated livery has a blend of colors Parker said would be cooler in the southwest United States. The new airline will fly under the US Airways flag, but be headquartered in Tempe, Arizona -- home of America West.

US Airways began its second trip through bankruptcy in two years last September.