GO
Loading...

Enter multiple symbols separated by commas

United-US Airways End Talks; Won't Pursue Deals Now

UAL, parent of United Airlines, and US Airways have decided not to merge, the chief executives of the two carriers said Friday in separate messages to employees.

United Airlines
Jacquelyn Martin
United Airlines

UAL's Glenn Tilton said his airline would not pursue a merger now due to "issues that could significantly dilute benefits from a transaction." US Airway's Doug Parker said he believes consolidation is needed in the industry but it is unlikely to happen in 2008.

UAL and US Airways had been in merger talks for months in hopes of creating a new airline that could better withstand the pressures of record high fuel costs.

Neither CEO said exactly why they decided not to merge but media reports have said opposition from labor unions and the costs of integration were key factors.

Tilton said UAL is evaluating other options and would take steps to "size the business appropriately, leverage our capacity discipline to pass on commodity costs to customers and accelerate development of new revenue sources."

Shares of UAL were down 3 percent, or 25 cents, at $8.14 on Nasdaq. Shares of US Airways were down 5.1 percent, or 22 cents, at $4.10 on the New York Stock Exchange.

The two carriers have been in talks about a possible merger for a few months, while United was also in talks with Continental Airlines for a full merger.

But United's merger talks with US Airways picked up steam in late April, after Continental called off full-merger talks with United.

The wave of talks come after Delta Air Lines and Northwest Airlines said in April they planned to merge and become the world's
largest airline, seeking to counter skyrocketing fuel prices, a weak economy and growing competition from European carriers as trade barriers fall on trans-Atlantic travel.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Pedestrians walk by a Skechers store in New York.

    The footwear company has nearly doubled this year. Craig Johnson of Piper Jaffray and Andrew Burkly of Oppenheimer discuss the next move with Brian Sullivan.

  • What massive M&A means for stocks

    It's shaping up to be a huge year for mergers and acquisitions. Craig Johnson of Piper Jaffray and Andrew Burkly of Oppenheimer discuss the next move with Brian Sullivan.

  • Cashing in on cannabis

    David Dinenberg, Kind Financial founder, is starting a financial services firm for marijuana.