In breaking news, the desk hears that US Airways and United Airlines may be holding merger talks.
They're knee deep in talks, says New York Times reporter Andrew Ross Sorkin on Fast Money. But we're several weeks away from a deal, he adds.
And I can't tell you we're going to get there. These things break apart.
The negotiations mark the latest efforts to consolidate the struggling airline industry. Both companies have been vocal in calling for greater consolidation within the industry to help prop up falling revenues, with United’s chief executive, Glenn F. Tilton, among the leading proponents for more mergers
This would be an answer to the Delta-Northwest combination, explains Sorkin, and an effort to bolster the balance sheet. Even as the economy gets better they still have little pricing power.
Structurally, US Airways will likely be the buyer however United will likely run the new company, adds Sorkin. Terms have not been set.
What's the trade?
I wouldn’t be surprised to see this deal happen, says Jon Najarian. And by taking capacity out of the system, it should make airlines stocks go higher.
If you're looking to trade airlines, I'd do it with JetBlue, counsels Gary Kaminksy.
Read More:
> United and US Airways Said to Be in Merger Talks
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Trader disclosure: On Apr 7, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian Owns owns call spreads in (PALM), (TXT), (AAPL); Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (AKS), Is Short (AKS) Calls; Jon Najarian Owns (BAC) Preferred; Jon Najarian Owns (FCX), Is Short (FCX) Calls; Jon Najarian Owns (C) Preferred; Jon Najarian Owns (GS), Is Short (GS) Calls; Jon Najarian Owns (IP) Call Spreads; Jon Najarian Owns (MCD), Is Short (MCD) Calls; Jon Najarian Owns (MS) Preferred; Jon Najarian Owns (NYT); Jon Najarian Owns (PALM) Call Spreads; Jon Najarian Owns (RIMM), Is Short (RIMM) Calls; Jon Najarian Owns (WFC) Preferred; Jon Najarian Owns (WMT), Is Short (WMT) Calls; Jon Najarian Owns (PALM) Call Spreads, (TXT) Call Spreads, (AAPL) Call Spreads; Terranova Owns Gold, Oil; Terranova Is Short (XLY); Kelly Owns (FXE) Puts; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (JPM); Finerman Owns (USO); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (WMT), (YUM), (MCD), (SKS); Funds Managed By Dennis Gartman Are Short S&P 500; Funds Managed By Dennis Gartman Are Short Euro; Funds Managed By Dennis Gartman Are Short Yen’ Funds Managed By Dennis Gartman Are Long Gold; Funds Managed By Dennis Gartman Are Long Natural Gas Trusts; Funds Managed By Dennis Gartman Are Long Copper; Funds Managed By Dennis Gartman Own (AAPL); Funds Managed By Dennis Gartman Own (DRI); Funds Managed By Dennis Gartman Own (FCX); Funds Managed By Dennis Gartman Own (GLD); Funds Managed By Dennis Gartman Own (PNRA); Funds Managed By Dennis Gartman Are Short (RIMM); Funds Managed By Dennis Gartman Are Short (SPLS)
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