This Day On The Street
Continue to site
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

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 - Get Report) 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.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LCC $0.00 0.00%
DAL $42.86 -1.90%
CAL $25.58 -2.29%
AAPL $95.03 -2.90%
FB $116.73 7.20%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs