US Airways-United merger is off 'at this time'
CHICAGO -- The CEOs of United Airlines and US Airways formally shelved their effort to create the world's largest airline, backing away from a deal that could have shored up their finances but also would have resulted in fewer routes and higher ticket prices for consumers.
The two chief executives confirmed the talks had been suspended in messages to their employees on Friday, a day after a meeting of United's Glenn Tilton and US Airways' Doug Parker at which United disclosed its decision not to pursue consolidation.
Chicago-based United, a unit of UAL, and Tempe, Ariz.-based US Airways Group have been exploring a combination for more than two months — an effort that intensified in April after Delta Air Lines and Northwest Airlines agreed to pair up.
US Airways' largest hub is in Charlotte
But the attempt was shadowed by the tightening financial outlook for all airlines, which has dried up cash and made them less attractive for the banks that would have to provide capital, as well as by the likelihood of labor turbulence and difficulties integrating the operations.
Pairing United with US Airways — the No. 2 and No. 7 U.S. airlines by traffic — would have formed a powerful carrier with potentially the most extensive U.S. and international route networks. It would have been bigger than Delta-Northwest by traffic, leapfrogging current No. 1, AMR's American Airlines, as well.
But the deal would have all but certainly entailed significant cuts where the two airlines' operations overlap, including the Washington, D.C., area and parts of the West. There was also the chance of higher fares at a time when ticket prices are already climbing steeply.
"The more competition we have and the more pricing decisions by CEOs we have, the better for consumers," said Tom Parsons, chief executive of travel website Bestfares.com. "It's still coming down to the bottom line, though: Can any one of these airlines survive in this era? These airlines are going to have a hard time surviving."
