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The parent of United Airlines Inc. walked away from the altar on Thursday, abandoning merger talks with US Airways Group Inc. in favor of pursuing an alliance with Continental Airlines Inc. US Airways and United parent UAL Corp. since late April had been in
discussions about a potential deal that could have cut significant
capacity out of their combined route network, a step toward the
airlines regaining pricing power in the face of climbing fuel prices.
But labor groups from both sides panned the proposed deal, pressing the
airlines to get their own houses in order before considering
consolidation.
The decision seemingly halts what was heralded as a wave of airline industry consolidation before it ever gained momentum. UAL had hoped to use a deal event to receive a liquidity injection from foreign partners or private investors. However, tight credit markets and pressure on international airlines to preserve cash, according to sources, gave the airline fewer opportunities to raise cash than management had hoped. US Airways, meanwhile, could also face troubles. The airline is vulnerable to discounter Southwest Airlines Co. in many key markets and does not have the extensive lucrative trans-Atlantic or trans-Pacific operations that other carriers are currently falling back on. - Lou Whiteman See full story on TheDeal.com See earlier Dealscape post: UAL, US Airways talks may still be on See Dealscape: Airline analysts: 'There will be blood' Categories Deal Video
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