Why the United/US Airways Merger Collapsed
About four to five dozen pilots attended the meeting, and many said afterward that they found it odd that Parker would raise the topic on his own, unprompted.
"We've had talks with airlines in the past," Parker said, at the meeting. "This (provision) always comes up. (It) is a large issue in consolidation talks. There will not be a merger if that's where the pay rates go. Anybody we would merge with can't let the pay rates go to those levels.
"You can't have both," Parker added. "You can't have a merger with that provision. (It) will either result in a merger never being done or it will be a merger that doesn't trigger that provision." Later, Parker met with USAPA leaders to discuss the potential merger, and they agreed to work with the airline to facilitate it.
Certainly, United saw merit in a deal with US Airways. Tilton, like Parker, has long been a strong advocate of consolidation. The two carriers' route systems could be rationalized to enhance revenue and reduce costs: in particular, the two carriers' Phoenix and Denver hubs do many of the same things, as do hubs in Philadelphia and at Washington Dulles airport.At the same time, Continental could bring more international resources to a deal. Moreover, such a merger would more closely resemble the merger between Delta (DAL) and Northwest, which has been well-received by investors. When press reports of the talks with US Airways surfaced, Continental executives were surprised, Robert Roach, general vice president of the International Association of Machinists, has said. But once Continental wanted to talk, United felt it had no choice but to listen. Eventually, some on the US Airways side came to believe that United's resistance to the proposed structure was an indication that the talks were a façade, intended to entice Continental to step in. That belief intensified as US Airways executives read media reports about ongoing discussions with Continental. On the United side, the feeling was that months and months of negotiations with US Airways represented a sincere effort to reach a deal.
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