United and US Airways Merger: A Bad Idea That's Now Dead

Yesterday, US Airways CEO Doug Parker announced that his airline was breaking off talks with United. Is anyone really surprised? Actually, some people are, but I'm not one of them. In fact, you might remember that when I first wrote about the United-US Airways talks, I said "I hate to even write about this, because I can't see it happening." And now I'm writing about it twice. Ugh.

In a letter to the troops, Doug said:

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.
So what happened? Well, they aren't going to say anything about it, but we can guess all we'd like.

It sounds like, unsurprisingly, United was the one driving these rumors this time around. We all know that United has had an urge to merge for a long time, yet they never seem to be able to get it done. Why is that? Well, in Holly Hegeman's PlaneBusiness, Hegeman notes that current United CEO Glenn Tilton won't do a merger unless he's involved in the combined company. That's a deal-killer for most in this industry. According to Holly, that would also block a Continental deal, but she thought that Doug Parker might be able to work with Glenn. Or not. Who knows?

Another rumor is that United restarted talks with US Airways (and then leaked it) in order to get Continental back to the table. In fact, Doug even mentioned Continental in his letter to the employees.

I am sure some "industry experts" will suggest that US Airways will be strategically harmed if United now chooses to merge with Continental. They will be wrong.
Does he know something we don't? Maybe, but then again, maybe not. I mean, it's public knowledge that United has pined over Continental for ages and keeps getting spurned. So maybe this was yet another attempt by United to get them back into the fold.

Either way, US Airways has been level-headed through this whole thing, as usual. Doug noted that even if US Airways isn't a part of the consolidation process, he fully supports it. Having fewer players in the industry is better for everyone. What do they say? A rising tide lifts all boats?

So once again, it's another case of failed United merger talks. Now the focus will shift to Continental to see if that turns into anything. *sigh* Please, wake me up when this recurring bad dream is over.