DealZone

The afternoon deal: Plane and simple?

April 8, 2010

A passenger aircraft is silhouetted against the setting sun in New Delhi October 12, 2008. REUTERS/B Mathur Their shares are up, so the market is saying a merger between United Airlines and US Airways would be a good thing, right? A tie-up could run into strong headwinds from unhappy pilots and tougher antitrust enforcement, industry experts told Reuters. The feeling on the Web is that a deal is inevitable… but it’s a painful road to be on.

From the Web:

Why the United- US Airways connection might not fly (Time)
“…you can’t fault the logic of a merger that would increase fares, since these guys really need the money. Wait a minute, watch me.”

United Is in Merger Talks With US Airways (NYT)
“But mergers in the airline industry have been difficult to pull off, in part because complex labor contracts can offset the promised cost savings.”

Airline Mergers: Necessary, Inevitable and Painful (WSJ)
“In the end, whether it happens voluntarily now or involuntarily when an airline or two ends up in dire financial straits again, I still think we’ll boil down to three international carriers and three major discounters. It just may be really painful to get there.”

US Airways and United in Merger Talks (The Atlantic)
“…what else are they supposed to do?  It’s all very well to say that they need to manage their business better, but the business they’re in isn’t a particularly good one…”

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