US Airways Backs Out of United Merger Talks

US Airways announced that it is pulling out of merger talks with United. In a statement, CEO Doug Parker 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.

“While it is our policy not to comment on rumors concerning strategic transactions, because of the persistent rumors about a possible transaction with United Airlines we believe it is appropriate to clarify the status of those negotiations. In the future, we will continue to follow our policy of not commenting on potential strategic transactions until we have entered into a definitive agreement with respect to a specific transaction.

“It remains our belief that consolidation makes sense in an industry as fragmented as ours. 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 outcome.”

Well, then. This really shouldn’t come as much of a surprise. United and US Airways have done the merger dance several times over the past decade, with each courtship ending in more or less this fashion. And, let’s face it: The death of this merger is probably a good thing for consumers.

Further, word on the street was that the whole thing was just a ploy by United to get Continental to the bargaining table. Now that US Airways is out of the picture, is the door open for Continental? CEO Jeff Smisek was noncommittal today. Which means it’s definitely time to crank up the rampant speculation machine.

Readers, what do you think? Will United and Continental work out a deal?