United, U.S. Airways talk merger

The tail of a United aircraft

TEXT OF INTERVIEW

Bill Radke: Sources say United Airlines and U.S. Airways are talking about joining forces. The merger of those two would create the second-biggest airline in the country. With more, here's Marketplace's Amy Scott joining us live. Good morning, Amy.

Amy Scott: Good morning.

Radke: Why would these two airlines want to merge?

Scott: Well it's all about cutting costs and trying to compete with the newly merged Delta-Northwest, which is now the world's largest airline. Combining operations could help these airlines save money, which is important right now -- the industry has lost $50 billion in the last decade and $11 billion just last year.

Radke: And why are airlines losing so much money?

Scott: Well you know, fuel aren't as high as they were a few years ago, but fuel is still very expensive. And of course the recession has put a big damper on air travel. And a lot of analysts think there's just still too much capacity out there. That is, too many empty seats. So they say that the path to making money again is consolidation. And just today, two of Europe's biggest airlines, British Airways and Spain's Iberia, signed a merger deal.

Radke: Right. So what would another merger mean for passengers -- are we going to end up paying more to fly?

Scott: That's always a concern when you have less competition. But this is by no means a done deal. The talks are reportedly in the early stages. These two airlines have talked about merging before and it didn't happen. And some analysts think these talks, though, could bring out other suitors, possibly other tie-ups.

Radke: Marketplace's Amy Scott. Thank you, Amy.

Scott: Thank you.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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