The NY Times is reporting:
Talks between United Airlines and US Airways appear to have fallen apart, marking the second time in a month that United failed to reach a deal with a rival airline and putting the future of industry consolidation in question, people with direct knowledge of the discussions said Tuesday night.
(full article here)
Obviously just about every customer loyal to either airline jumped up in joy at this announcement, but there’s a bigger issue at hand here, as far as I’m concerned, and that’s UA’s long term viability.
To be honest I don’t think UA is in the worst situation among US carriers, but they’re not in a good situation either. The biggest failure of UA’s upper management, in my opinion, is that they seem to think that the only shot at long time survival is consolidation, and that it must somehow include them. Ultimately there’s no doubt in my mind that capacity reduction is necessary, but I’m not so sure that means consolidation, at least for UA.
So what’s good about all this merger talk for UA? Well, hopefully UA’s upper management has learned a lesson, and will do their best to start having a long-term vision for UNITED, not (B)USTED, or CONTITED, or any other combination you can come up with. While UA should consider all options, essentially relying on a merger for survival just isn’t a good plan.
So let’s see what happens next. Let’s hope UA doesn’t continue these games with completely incompatible airlines. To sum it up, Mr. Garfinkle hits the nail on the head:
“Mergers in and of themselves are not the answer. Look around the world — airlines are making money, in Europe, Asia and Latin America,” said Mo Garfinkle, a veteran airline industry consultant. “There’s a more fundamental problem here. We need to cut capacity” meaning both aging aircraft and flights, Mr. Garfinkle said.