Editorials

CHICAGO — United Airlines is pulling the plug on its $4.3 billion purchase of US Airways – a deal that has been in trouble for months because of a weakened economy, industry woes and antitrust concerns. 

While stopping short of declaring the deal dead, the two airlines said Monday that they are talking about scuttling it. 

United is convinced the deal will not win regulatory approval, according to a person familiar with the matter who spoke on condition of anonymity. 

Transportation Secretary Norman Mineta said last month he expected the government to reject the merger. 

The deal would have been the biggest airline merger in history. But both airlines have problems of their own to sort out – United has slipped to No. 2 behind American Airlines and US Airways has shaky finances. 

Some experts see the long-expected collapse of the deal as good news for everyone. 

“It’s good for United because it can focus on its real business challenges. It’s good for US Air because they can focus on being a stand-alone carrier. And it’s good for the consumer, who won’t lose a lot of competition because of the merger,” said Michael Boyd, an industry consultant in Evergreen, Colo. 

United unveiled the merger plan in May 2000, hoping to increase its presence in the lucrative East Coast market and nearly triple its daily flights to more than 6,400 a day. 

It quickly ran into opposition from rivals, unions, Congress, consumer groups and state attorneys general, many of whom complained it would reduce competition, particularly in the Washington area. 

To try to ease antitrust concerns, United agreed in January to sell some US Airways assets to American Airlines, including half of US Airways’ Washington-New York-Boston shuttle. 

But experts said a complicated, costly deal no longer made financial sense for United. 

The airline reported a worse-than-expected first quarter loss of $313 million and said it expects a double-digit decline in revenue for the second quarter. United also signed a contract with its pilots last year, giving them 45 percent raises over four years. 

The Association of Flight Attendants had threatened to strike United if the merger proceeded. 

United will have to pay US Airways a $50 million breakup fee if it ends the agreement after Aug. 1. Before that date, the breakup fee is substantially higher, but United is asking to pay only $50 million. 

US Airways stock sank $3.41 to close at $20.89 Monday on the New York Stock Exchange. United’s parent, UAL Corp., fell 45 cents to $34.70.