US Air (LCC) Walks From United (UAUA) Talks As The Wheels Come Off

By Douglas A. McIntyre Published May 28, 5:01AM EDT

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Reports are that the heated merger talks between United (UAUA) and US Air (LCC) have gone away. Both airlines are probably still talking to AMR (AMR), Continental (CAL), and any other puddle-jumper with a single-engine plane that they can find.

The airline industry got another dose of electric-shock therapy yesterday when JetBlue (JBLU) said it would defer taking delivery of a number of new Airbus jets. If the airline doesn’t make it, the delivery could be dodged altogether.

Managements at United and US Air have probably decided that thousand of hours talking about mergers will not save them. With oil at $130, putting together two airlines is not unlike lashing two drowning men to a raft. Neither will be lonely, but both will still die.

The name of the game in the airline business now is cutting capacity and personnel. In a merger, that work of making a deal and going though the time-consuming effort of combining two companies could take months. No one in the industry has that kind of time. At least if a carrier goes it alone, it can make decision about how to bleed itself quickly.

There may be a certain genius in the AMR move to stay away from diving into complex merger conversations. Instead, it is simply closing its operations in certain cities, taking planes out of service, and firing thousands of poor souls into the teeth of a recession.

Mergers will not work as fast as unilateral chopping.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.