This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

US Airways, United Discussed Merger

CHARLOTTE, N.C. -- Not surprisingly, US Airways (LCC) talked recently with UAL (UAUA), the parent of United Airlines, about a potential merger, which would revive a deal that was rejected by regulators in 2001.

The two companies were in fact having discussions before Delta (DAL) and Northwest (NWA) announced plans Tuesday to combine, according to a person familiar with the situation.

However, the Delta and Northwest deal has reignited interest in a merger between Continental (CAL) and United, the source said, which could push US Airways out of the picture.

A deal between United and US Airways would provide United with two things it has always lacked: a Southeast hub in Charlotte and a strong presence at key Northeast airports. Additionally, the two carriers already code-share in 270 markets, and are both members of the Star Alliance.

That could make a difference. As Delta CEO Richard Anderson said on Tuesday, existing code-shares and membership in the same alliance give Delta and Northwest a leg up as they move toward their more-than-$3-billion merger.

One thing is certain -- were United to acquire US Airways, the price would be less than the $11.6 billion that United agreed to pay when the deal was proposed in 2000. In fact, some insiders felt that regulators turned down the deal when United backed away after deciding the price was too high.

Shares of UAL rose 2.4% to $22.86, while US Airways fell 1.2% to $8.05.

In a letter to employees on Wednesday, CEO Doug Parker did nothing to diminish speculation that the carrier may become involved in a transaction.

"While we had hoped to remain on the sidelines of merger speculation, today's Wall Street Journal suggests we may be in merger talks with United, and another article in the Dallas Morning News suggests we might make a good merger partner for American," which is operated by AMR (AMR).

"Most of you know my views on consolidation and those have not changed," Parker wrote. "Our industry is far too fragmented, and consolidation, if done properly, could result in a much healthier industry which would be good for our employees, our customers and the communities we serve."

Parker also said that if US Airways does take part in a merger, "we will do so because we believe it is the best interests of our employees and our airline." He added that despite the problems associated with the 2005 merger between America West and US Airways, the carrier is stronger today as a result.

Continental executives told employees this week that a key obstacle to a deal for that company had been removed with the Delta and Northwest announcement. That arrangement gave Continental the ability to redeem a "golden share" that provided Northwest veto power over any transaction involving Continental.

United CEO Glenn Tilton also wrote a letter to workers on Monday, reiterating his longstanding support for consolidation.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,815.07 -2.83 -0.02%
S&P 500 2,068.67 -0.74 -0.04%
NASDAQ 4,758.9460 +4.0540 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs