Analyst: AMR/US Airways Deal Makes Sense

DALLAS (TheStreet) -- A leading airline analyst is sounding skeptical about AMR's plan to go it alone -- and enthusiastic about the chance of a merger with US Airways(LCC) .

In a note issued Wednesday, JPMorgan(JPM) analyst Jamie Baker describes himself as "underwhelmed with AMR's standalone restructuring plan" and says that "for this reason, we now ascribe a higher probability that AMR ultimately engages in industry consolidation."

American Airlines could boost its domestic presence by merging with US Airways, a JPMorgan analyst says.

"We believe the merits and regulatory challenges of a US Airways-American combination warrant further consideration," Baker says. He also largely dismisses reports that Delta(DAL) would pursue American, saying that effort "continues to strike us as a high-risk, lower-probability outcome."

Baker questions American's plan to boost revenues by $1 billion annually, saying the number is "ambitious" for a plan based largely on increased code-sharing and larger regional jets. Baker doesn't mention the fleet improvements cited by AMR Chief Commercial Officer Virasb Vahidi, who believes orders from Boeing and Airbus would enable American to fly routes for which it lacks appropriately sized aircraft.