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 Don't count a deal between UAL Corp. and US Airways Group Inc. out yet. Despite reports Wednesday that talks between the two airlines were on hold, the CEOs of the two companies are expected to meet Thursday to discuss the progress of their discussions, according to a wsj.com report. If the meeting goes well, the companies could approach their boards in mid-June for permission to move forward with a transaction, according to the story.
Industry sources suggested Wednesday that talks had halted, which was first reported in The New York Times, was premature. But given the precarious state of the industry, these sources say that issues including labor opposition and potential merger expenses were being weighed when considering whether to move forward. United is also considering other options, including a codeshare with Continental Airlines Inc., which would be easier to get by labor and regulators but which would not offer the same cost savings as an outright merger.
Harlan Platt, a finance professor at Northeastern University who follows the airline industry, described the talks between the airlines as "like two condemned prisoners sitting down the night before their execution," willing to discuss anything. "No easy solutions exist," he added.
The smart bet is that these CEOs, who have been among the most vocal advocates of airline consolidation, will find a way to get a deal done. But with oil at $120 per barrel and the airlines facing what Platt called "the most dire moment in the entire history of the industry," it is hard to say for sure. - Lou Whiteman
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