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 Followers of Delta Air Lines Inc.'s drawn-out negotiation to buy Northwest Airlines Corp., which played out for more than two months before an announcement was made, know all too well the danger of putting too much stock in airline gossip. But the rumor mill was churning again on Friday with talk of potential dealmaking involving United Airlines parent UAL Corp. and US Airways Group Inc.
UAL has long been an outspoken proponent of consolidation, and it has been widely expected to make a move in response to Delta's planned deal. The airline has had extensive talks with Continental Airlines Inc.; however, sources say disagreements over how a deal would be structured and Continental's hesitance to sell has complicated those discussions. In recent days talk of a United-US Airways combination has increased. Industry sources confirm that the two airlines have indeed breeched the idea, with some predicting UAL could buy US Air outright while others suggesting United might split the target with Continental, a deal that, though complicated, could strengthen Continental out West and United in the Northeast. Meanwhile American Airlines parent AMR Corp. is also considering its options, and reportedly holding discussions with Continental about a potential alliance while at the same time having early-stage merger talks with US Air, according to Reuters. While it is hard to say what the outcome of all of these discussions may be, the extent of the talks shows how serious airlines, beaten down by record-high fuel prices, are about consolidation. And with time running out to have a deal reviewed concurrent with Delta-Northwest by the merger-friendly Bush administration, chances are this chapter of the melodrama will not take as long to play out as the painfully slow Delta negotiations did. - Lou Whiteman See TheDeal.com story on Delta's deal for Northwest See TheDeal.com story on UAL seeking out a partner See TheDeal.com story on US Airways merger rumors
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