US Airways halts merger talks with United

By Chavon Sutton, staff reporter


NEW YORK (CNNMoney.com) -- US Airways announced Thursday that it has discontinued merger talks with United Airlines.

The Phoenix-based US Airways (LCC, Fortune 500) halted talks after months of speculation about a potential merger with UAL Corporation (UAUA, Fortune 500), the fourth largest U.S. carrier and the parent of United Airlines.

"US Airways has long been a proponent for consolidation in our industry," US Airways chief executive Doug Parker said in a statement.

"We have recently held discussions with United Airlines regarding a possible combination between our two airlines. After an extensive review and careful consideration, our Board of Directors has decided to discontinue those discussions," he later added.

Reports about combining the two companies have been around for years. But merger talks heated up again after 2008's Delta Air Lines (DAL, Fortune 500)-Northwest Airlines combination.

Airline analysts have said that the recession-battered industry is crowded with carriers, and needs to consolidate.

In 2009 alone, the number of domestic and international passengers on U.S. airlines fell 5.3%, according to the U.S. Bureau of Statistics. And the recent volcano eruption in Iceland added insult to injury, grounding commercial flights and costing airlines tens of millions of dollars a day.

Though the company had earlier declined to comment on rumors of a potential merger, it said in a statement that Thursday's announcement was "appropriate to clarify the status of those negotiations."

Still, the company hinted to the possibility of a merger in the future. "It remains our belief that consolidation makes sense in an industry as fragmented as ours," said Parker.

"Whether we participate or not, consolidation that leads to a more efficient industry better able to withstand economic volatility, global competition, and the cyclical nature of our industry is a positive one," he said.

The merger would have created the second largest airline in the U.S., behind Delta.

CNNMoney.com staff writer Aaron Smith contributed to this report. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,232.02 -53.72 -0.29%
Nasdaq 5,089.36 -1.43 -0.03%
S&P 500 2,126.06 -4.76 -0.22%
Treasuries 2.22 0.03 1.37%
Data as of 1:44pm ET
Company Price Change % Change
Bank of America Corp... 16.75 0.02 0.12%
Apple Inc 132.54 1.15 0.88%
Hewlett-Packard Co 34.76 0.93 2.75%
AT&T Inc 34.71 -0.36 -1.03%
Microsoft Corp 46.90 -0.52 -1.10%
Data as of May 22
Sponsors

Sections

The record airbag recall and the GM ignition switch recalls has resulted in a huge percentage of cars on the road today having been recalled. More

The True Cost, a new documentary, chronicles the evils of the clothing industry and asks us to stop buying so much cheap stuff More

Sarah Kauss launched S'well to rid the world of plastic water bottles. In five years, she's sold 4 million of her stainless steel bottles. More