US Airways Ends Talks with United about Merger

A United Airlines jet parks at the gate next to US Airways jets at O'Hare International Airport in Chicago. GD, 020418
AP
US Airways Group Inc. said Thursday it has ended talks with United Airlines about a combination.

The announcement came after word that United and Continental Airlines Inc. have exchanged information as a prelude to a possible combination between those two carriers.

Industry experts have suggested that a United-Continental combination makes more sense in part because of the two carriers already cooperate with each other.

If United and Continental were to complete a deal, it would create the world's largest carrier, leapfrogging over Delta Air Lines.

In a memo to employees, US Airways CEO Doug Parker said that the carrier continues to believe in the merits of consolidation, but for the foreseeable future it intends to remain a standalone carrier.

"As I have said many times, it is not necessary for us to be direct participants in a merger because the entire industry benefits when consolidation occurs," Parker said.

US Airways shares fell 27 cents, or 4 percent, to $6.49 in morning trading. Shares of UAL, United's parent, rose 23 cents to $21.66

Earlier his month, British Airways PLC and Spain's Iberia SA signed a merger deal to create one of the world's biggest airline groups.

They expect the deal, which follows a provisional agreement reached at the end of last year, to be completed by the end of 2010.