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Fri, May 30, 2008

May As Well Flip A Coin On US Airways-United Merger...

Unnamed Sources Say Deal Is Either DOA... Or Imminent

And now... dueling headlines. The New York Times reported this week that the merger between United and US Airways was dead -- a story ANN picked up, as well.

As it turns out, however, the Old Gray Lady may not have had the entire story. The Wall Street Journal also reported Wednesday talks between merger teams from both sides were very much alive, and another session was scheduled for Thursday. But that's not all -- The Associated Press reported Thursday United CEO Glenn Tilton and US Airways CEO Doug Parker are meeting in person.

AP reports its sources say the merger faces numerous hurdles, but is still possible despite published reports that the talks may have broken down. The Wall Street Journal reports one issue on which both sides agree is the amount of operational savings which could be achieved through a merger -- about $1.5 billion dollars a year. That could be one compelling reason to keep the talks alive.

Industry sources agree that US Airways is made a much-less-attractive merger partner by the ongoing workforce integration hangover from its merger three years ago with America West. The union representing pilots of the old US Airways claims settling that mess could take up to seven years; United pilots have said they'd rather not get involved in that mess themselves, stating United/US Air merger would be "a toxic stew" for that very reason.

Both companies have declined official comment on any of the variations of the reports. Combined, United and US Airways have about 91,000 employees, more than 800 airplanes and annual revenues of almost $32 billion.

All three news organizations cited "unnamed sources close to the talks." The only thing we know for sure now is that the reliability of "unnamed sources close to the talks" appears to vary widely.

FMI: www.usairways.com, www.united.com

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