Filed under: Deals, US Airways Group (LCC), UAL Corp (UAUA), Delta Air Lines (DAL)
Another day. Another merger of two struggling airlines.
This time it’’s UAL Corp.’s (NYSE: UAUA) United Airlines and US Airways Inc. (NYSE: LCC), which together lost more than $773 million in the first quarter are reportedly in are “advanced” merger speaks, two sources familiar with the situation told The Associated Press. These “sources” might be public relations people who are leaking details of the deal at the direction of the investment bankers and the companies themselves.
Wall Street is reacting positively to the news sending shares of US Airways in mid-afternoon trading. I’m not so sure a party is in order. For one thing, as Reuters and the Associated Press both have noted this is a marriage of necessity.
“The discussions intensified over the weekend after Continental Airlines Inc, which had been in negotiations with United, pulled out to explore a potential marketing alliance with AMR Corp’s American Airlines and British Airways Plc,” according to Reuters.
The combined company would have to compete against the combined Delta Airlines Inc. (NYSE: DAL) and Northwest Airlines Corp. (NYSE: NWA) which will create the largest airline.
Airline mergers have had such a lousy track record, what makes people think these will be any different?
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