United Airlines thinking of marriage

Exec's comments put US Airways in picture

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Could United Airlines and US Airways try to hook up -- again?

Their last merger attempt was in 2001, and the U.S. Justice Department nixed the combination for antitrust reasons. But that was before the attacks of Sept. 11, 2001; before two trips through bankruptcy for US Airways and one trip for United, lasting three years; not to mention before billions of dollars in losses for a beleaguered airline industry.

What got the chat boards, employees and analysts buzzing again were comments made last week by United Chief Financial Officer Jake Brace, who told a New York transportation conference that the Chicago-based company remains interested in a "consensual" consolidation with a carrier that has both a strong presence in the Northeast and a hub in the South, so the nation's No. 2 carrier can strengthen its connections to the Caribbean and Latin America.

No airline fits that description better, arguably, than US Airways, which began 70 years ago as a Northeast-only carrier and evolved to one that serves the Caribbean and Latin America from a large hub in Charlotte, N.C. It still has a significant presence in Washington, D.C., New York, Boston and Philadelphia.

"I see US Airways as the very best fit," said local airline analyst Bill Lauer. "It wouldn't surprise me at all if there were some back channel conversations happening there."

Tempe, Ariz.-based US Airways, which announced a deal yesterday to buy 92 new jets from European aircraft maker Airbus and outlined plans to retire all Boeing-made jets in its fleet, did not respond to Mr. Brace's comments after they were made last week.

Asked about United yesterday, spokesman Phil Gee reiterated a point made earlier this year by US Airways Chief Executive Officer Doug Parker, who said further industry consolidation may have to wait until another downturn in the industry. Mr. Parker was instrumental in the 2005 merger of the old US Airways, based in Arlington, Va., and America West Airlines.

"We wouldn't speculate or comment on whom we might consider for consolidation anyway," Mr. Gee said in an e-mail.

Two other rivals fit the loose description of a preferred United merger partner -- Atlanta-based Delta Air Lines, which just emerged from bankruptcy after spurning a takeover offer from US Airways, and Houston-based Continental Airlines, one of the few larger carriers not to enter and exit bankruptcy recently.

Both have a large presence in the Northeast. But Mr. Lauer and Virginia airline consultant Darryl Jenkins agree that Delta and Continental are less likely as United merger partners than US Airways. Delta, after all, rejected United's overtures while it was still in bankruptcy, and "I am pretty sure Delta does not want to do a merger," said Mr. Jenkins, a well-connected figure in the airline industry.

As for Continental and United, Mr. Jenkins also was doubtful, saying: "Their management styles are so different."

Management issues -- meaning who is in charge -- could cloud a United-US Airways union, but both United Chief Executive Officer Glenn Tilton and Mr. Parker of US Airways have been vocal about the need for consolidation if the industry is to thrive long term.

"I believe there will be another round of consolidation," said Kent George, executive director of the Allegheny County Airport Authority, which runs the Pittsburgh International Airport, where a near-record 6,500 passengers passed through the gates yesterday without any major slowdowns as people made their way home from the weekend's U.S. Open in Oakmont. "But I don't know who it's going to be or how soon it's going to be."


Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752.


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