United, US Airways Talk Merger

By Marcus Gilmer in News on Apr 8, 2010 2:20PM

Chicago-based United Airlines and Tempe-based US Airways have revved up talks of a merger into a super airline once again. They've tried before to make a deal that would create the second largest airline, behind the now-merged combo of Delta and Northwest. Some speculate, though, it may just be United courting a suitor to get the attention of others. From the New York Times:

United’s chief executive, Glenn F. Tilton, has made no secret of his desire to find a partner for the company. In 2008, he held extensive talks to merge with Continental but was rebuffed.

“United has been standing at the altar waiting for the bride to show up and just got tired of waiting,” said Mo Garfinkle, a longtime airline industry consultant. “Maybe by flirting with another girl, it can get Continental’s attention again.”

Vaughn Cordle, managing director of AirlineForecasts, estimated for the LA Times that a United-Continental merger would be worth twice as much in market value ($5.8 billion) than a United-US Airways merger ($2.5-$3 billion). Even if the two airlines were able to reach a deal, it's by no means a sure thing. Union issues, specifically over issues of seniority, could hold up any deal. But if the deal does go through, will it be worth it for consumers? One expert says no.

"It's the consumers that will pay for this," said Michael DiGirolamo, aviation consultant and retired deputy executive director of the Los Angeles airport department. "If they merge, it's likely that they'll eliminate a number of seats and increase the price for those that are left."