There is no way that AAG would spend the money on a merger. They can get all of the pilots that they want right now, so the smart move would be to just cut one of the airlines and allow them to reapply with preferential hiring at the bottom of the seniority list of another. Dropping all of those pilots back to first year pay would save a great deal of money. If the pilots don't want to go, there are literally thousands of pilots right now that will take those jobs.
The smartest move would be to move the airplanes away from Piedmont (the smallest of the airlines with a fleet that will be in the desert in a year from now anyways) and leave them as a ground handling and service agent only company. Eventually let them be a specialized company that only does the ground handling and ticket service stuff, and leave the flying to PSA and Envoy. Embraer 170/175 to Envoy, CRJ 700/900 (and whatever its replacement will be) to PSA.
Whipsaw is real, and there is a time that having many airlines is beneficial. There is also reverse whipsaw, where having too many airlines is detrimental. Airlines competing for the limited number of pilots for the last few years was harming the airlines (to the benefit of the pilots). The regionals were in the territory of reverse whipsaw when this all happened, and with more pilots on the street than are needed, they do not need to whipsaw anymore. It is beneficial to start to consolidate.
Besides, we all heard Isom say that there will be another regional airline cut in the near future from AA flying. Some movement is going to happen.