In its first public acknowledgement that it has been in merger discussions, US Airways today said it has halted such talks with United Airlines, casting the industry's eyes toward Continental Airlines as United's likely suitor, though both carriers remain mum.
US Airways CEO Doug Parker in a statement today 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."
As rumors came to light earlier this month that United and US Airways were exploring a potential tie-up, some analysts and industry watchers said those discussions would prompt other merger scenarios—most likely one between Continental Airlines and United
(BTNonline, April 8).
Continental president and CEO Jeff Smisek during the carrier's first-quarter earnings call this morning, however, would not comment on what he called "recent press speculation concerning potential consolidation in our industry." Still, he told analysts and media, "As you would expect of a responsible management team, we are examining Continental's options and will take whatever action we deem to be in the best interest of our co-workers, stockholders, customers and the communities we serve. Neither I nor my colleagues will be commenting any further on consolidation matters at this time."
US Airways, which failed to consummate a takeover of Delta Air Lines in 2007 but successfully acquired America West two years earlier, long has been a proponent of domestic airline consolidation. Parker said the company remains so, even if it's not part of the action. "It remains our belief that consolidation makes sense in an industry as fragmented as ours," Parker said. "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."