Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Index Last Change % Change
Dow 18,296.92 -42.32 -0.23%
Nasdaq 5,294.12 -24.43 -0.46%
S&P 500 2,166.60 -4.77 -0.22%
Treasuries 1.58 0.02 0.96%
Data as of 11:46am ET
Company Price Change % Change
Chesapeake Energy Co... 6.44 -0.31 -4.59%
Procter & Gamble Co 88.41 -1.05 -1.17%
Bank of America Corp... 15.40 0.02 0.13%
Marathon Oil Corp 16.00 0.82 5.42%
Apple Inc 112.35 -1.60 -1.40%
Data as of 11:31am ET
Sponsors

Sections

Pepsi reported earnings and sales that topped forecasts and raised its outlook. The stock is outperforming top rival Coke too. The main reason? Even as consumers are shifting away from sugary soda, they still love potato chips. More

With tougher enforcement of immigration laws and more undocumented workers leaving the country, American farmers say they are facing a severe worker shortage -- and they can't get American workers to fill the jobs. More

The FCC will vote Thursday on a new set of rules for smartphone emergency alerts, including an ability for authorities to send links to pictures and phone numbers through the system. More

A new report assesses the affordability, quality and availability of child care in every state. Connecticut ranks best overall, while West Virginia comes in last. More