The WSJ has confirmed that UAL Corp. (NASDAQ: UAUA) and US Airways Group Inc. (NYSE: LCC) have broken off merger talks. The CEOs of both companies have noted that they believe in consolidation, but $130 oil is making the companies look at other more attractive options.
Both companies have left the door open to mergers down the road, but for now talks are off.
What is perhaps most important here is the implication for the airline industry. JetBlue Airways Corporation (NYSE: JBLU) is also seeing shares under pressure since it just raised $175 million in convertible notes.
Perhaps if the airlines want to look at deals, perhaps they should buy small oil drillers and producers to cut out all the middlemen. But that's not likely to happen.
We're all going to be facing significantly higher airline ticket prices and more individual charges that will feel like nickel and dime strategies.
Unfortunately in the world of airline mergers, 1+1=1.
For UAL and US Air, 1+1=1
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