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United, US Airways not merging

The tail of a United aircraft

TEXT OF STORY

Scott Jagow: I told you yesterday the CEO's of United and US Airways were talking about a merger. Well, they did talk, but they decided not to merge. United's CEO says instead, his airline will take steps to "size his business appropriately."
I think we all know what that means. More now from Jeremy Hobson.


Jeremy Hobson: In a note to employees this morning, United's CEO says the airline will not be merging with anyone for the time being.

Seth Kaplan of Airline Weekly says that's not a surprise, given rising fuel costs.

Seth Kaplan: Mergers are almost unaffordable. Not everybody has perhaps a billion dollars just for integration costs in the hopes that they'll maybe make a billion dollars back several years later.

Things are more troubling for US Airways. It's been rejected by Delta and United, and with
the rest of the legacy carriers are in talks with each other.

Short of a merger, says Seth Kaplan:

Kaplan: You know, you'd rather be an airline with good international exposure. With the planes and the hubs to be able to serve creative international markets, where there's not going to be a lot of low-cost competition.

Kaplan says US Airways has put in orders for some wide-body jets to beef up its minimal international service, but it'll be years before they arrive.

I'm Jeremy Hobson for Marketplace.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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