United Airlines’ move gets merger rumors off the ground
United Airlines’ hiring of Goldman Sachs & Co. to explore strategic options fueled speculation of another round of possible airport mergers, according to recent news reports.
“United, a unit of UAL Corp., has been advocating more industry consolidation for years under CEO Glenn Tilton and is in better position since leaving bankruptcy in February to take part in it,” said the Associated Press.
The report by Crain’s Chicago Business that United hired the investment banker added credence that the airline could merge with Continental or possible Delta Air Lines.
United declined comment, but many observers see industry consolidation as likely sometime in the future.
Mr Tilton has long said consolidation in the industry is inevitable.
“United fully intends to expand our global reach to compete in the world’s fastest-growing markets,” he said in a speech this week.
United is the second largest US carrier.
Continental, the fifth largest US airline, has long been considered a potential partner largely because of complementary route networks.
But Delta Air Lines has also been mentioned for the same reasons.
A merger with either one would create the largest US airline.
“There’s a lot of impetus for consolidation in the industry,” said Michael Roach, a consultant. “But these deals are incredibly complicated, both to negotiate and to put together.”
One of the reasons is that any merger would have to be approved by the US Department of Transportation and the Justice Department.
The only US merger to be completed recently was America West’s acquisition of US Airways.
Report by David Wilkening
David
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