United - US Airways Merger Officially Shelved
In the latest development, United and US Airways have suspended their plans to merge and create the world's largest airline. The two airlines had been in discussion for months, and had ramped up their efforts after Delta and Northwest agreed to merge.
US Airways CEO Doug Parker told his employees that he strongly believes consolidation is required in the airline industry and that US Airways would benefit from participating.
High fuel costs continue to threaten the industry, and both CEOs cited this as making it increasingly difficult for airlines to be profitable.
Continental Airlines Inc. recently rejected United's attempt at a combination but left the door open for an alliance. An alliance would provide many of the same financial benefits as an official merger but allow both airlines to avoid some of the technical hurdles such as financing and labor issues.