Business and Finance

WASHINGTON–UAL Corp. and US Airways Group Inc. are in advanced merger talks prompted by Continental Airlines Inc.’s decision this weekend to walk away from similar talks with UAL, according to sources with knowledge of the matter.

A deal could be finalized within the next few weeks and could include meaningful capacity cuts, the sources added yesterday. UAL, parent of United Airlines, is also thinking about broadening its global alliance network instead of striking a merger.

"It’s probably going to get done," said Ray Neidl, an analyst with Calyon Securities.

United and US Airways failed in a merger bid in 2001 over competition concerns. Several insiders said a new merger proposal would be different due to changes the two carriers made while in Chapter 11 bankruptcy protection and due to the recent growth of low-cost carriers.

United had been in talks with Continental, which on Sunday pulled out to explore a potential marketing alliance with AMR Corp.’s American Airlines and British Airways PLC.

Continental called off talks because of United’s weak financial condition and a feeling that a merger would risk Continental’s own financial health, a source told Reuters on Sunday.

Continental’s decision came as a surprise to United, which had hoped to reach a deal possibly this week, one of the sources said.

Glenn Tilton, chief executive of UAL and a strong proponent of consolidation, did not address the US Airways situation in a message to employees.

"We continue to evaluate our options and will do what is right for United," Tilton said.

Sources described the United/US Airways talks as advanced or very advanced, but there was no indication they were at the stage that UAL had reached with Continental.

All sources said UAL and US Airways still had a lot of work to do.

Most of the United States legacy airlines face few options to counter skyrocketing fuel prices, tougher competition and rapidly deteriorating finances payday advances payday loan.

The carriers are under pressure internally and from investors to merge or take other steps to help themselves.

With news that UAL and US Airways have accelerated discussions, all four major carriers that overhauled themselves in bankruptcy protection this decade – UAL, US Airways, Delta Air Lines Inc. and Northwest Airlines Corp. – have either reached agreement to pair off or are trying to do so.

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