United, US Airways merger off

CHICAGO, May 30 (UPI) -- Two U.S. airlines, United Airlines and US Airways, have scuttled merger talks because United is about to align itself with Continental Airlines, sources say.

The Wall Street Journal reported Friday that two sources familiar with the situation said the United-US Airways merger discussions were called off after Glenn Tilton, chief executive officer of United's parent firm, UAL Corp. of Chicago, informed Doug Parker, head of US Airways Group Inc. of Tempe, Ariz., that the Continental alliance deal was close to fruition.

The United and US Airways merger exploration had been going on for more than two months, while Continental had rejected a total merger with UAL a month ago, the newspaper said.

Tilton reportedly told Parker about the situation with Continental at lunch Thursday. An alliance with the Houston airline wouldn't be as costly nor would it attract as much attention from the U.S. Justice Department, the Journal reported.

However, the sources told the Journal that Tilton told Parker that while the merger is off the table for now, he didn't rule out returning to the topic in the future.