United president to workers: Don't focus on merger reports

The president of Chicago-based United Airlines Thursday wouldn't discuss speculation of merger talks with US Airways, and instead asked his employees to focus just on their good work.

That didn't make union workers feel any happier. They just want new contracts.

"This speculated proposition has 10 years of failed history," said Sara Nelson, a spokeswoman for United's Association of Flight Attendants. "We will not be distracted from the negotiation goals set by United Airlines flight attendants. Management is now three months late in negotiating a contract with flight attendants that reflects the pay, benefits, working conditions and retirement security we have earned. Airline management would be better served to get their own house in order."

The United pilots union also believed the US Airways pilots face years of litigation as they attempt to work through their operational integration with America West pilots. So United pilots would not benefit, said Wendy Morse, chairman of the United Master Executive Council, Air Line Pilots Association.

"We are not opposed to any merger that would benefit the careers and the long-term future of United pilots," Morse said. "A merger with US Airways does not appear to come close to meeting that standard. We vehemently oppose any merger that would not lead to a strong and viable United Airlines."

UAL CEO Glenn Tilton has long advocated mergers within the airline industry, especially after a rough recession, increasing costs and route competition from discounting airlines.

United President John Tague asked his employees in a letter on Thursday to focus on doing good work, and to ignore rumors and speculation. He pointed out that, despite the wave of attention the so-called speculation received, the airline's traffic performance improved in March and "once again demonstrated that we are leading the industry in revenue recovery."

United's March revenues were up over last year an estimated 21.5 percent to 23.5 percent, and up over two years ago 3.2 percent to 5.2 percent.

"This is yet another example of the foundation we are laying to run a great airline," Tague said.

However, Tague's letter didn't dispute the so-called rumors, nor did it discuss the future of the airline. Instead, the letter also emphasized United's improving on-time performance and compliments to the staff.

"We will continue to focus on this work to strengthen our company because, when all is said and done, the company that does the best work wins," Tague said. " More and more, we are that company with the full knowledge of the opportunities to improve further. That is, and will continue to be, what drives us forward."

Wall Street greeted the rumors with glee, but analysts suggested a merger might not be the best thing for travelers.

US Airways and United lost a combined $856 million last year, and shareholders like the idea of a merger that could counter the current glut of competition that has resulted in lower ticket prices and heavy profit pressures.

But, as Tim Winship, editor of FrequentFlier.com noted, "Mergers tend to be a net negative for consumers."

A combined United-US Airways would be the nation's second biggest carrier, behind only Delta Air Lines Inc. Combining them "would inevitably result in a significant loss of competition, the predictable result of which would be an increase in airfares in certain markets," Winship said.

The two airlines are both major carriers in Washington, although that market also has extensive service from discount carriers.

Both carriers have tried for combinations in the past. Tilton and US Airways Chairman and CEO Doug Parker were both involved when their companies talked about a tie-up in 2008. They walked away then citing high fuel prices, but didn't rule out a future deal. That same year, Continental Airlines Inc. rejected United's attempt at a combination.

Neither airline has confirmed the talks.

Associated Press contributed to this story

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<li><a href="/story/?id=371746">UAL, US Air merger would reshape industry, cut seats <span class="date">[04/08/10]</span></a></li>

<li><a href="/story/?id=371584">UAL, US Airways shares rise after reports cite merger talks <span class="date">[04/07/10]</span></a></li>

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