"Most" of the uncertainty surrounding a potential US Airways-United Airlines merger is on United's side of the negotiating table, according to a source familiar with the deliberations who described US Airways' board as "farther along" on the idea.
A number of issues still need to be addressed for a deal to happen.
While both sides agree on which is the stronger brand name (United), among the many issues "not decided" yet are who would run the airline and where it would be based, this source added. A recent Chicago Tribune report suggested that US Airways Chief Executive Officer Doug Parker could run the combined carrier from Chicago, United's current home, and a separate report in the Financial Times suggested that Mr. Parker could be given a senior role in the new airline with a chance to eventually succeed United Chief Executive Officer Glenn Tilton.
The source familiar with the deliberations said both sides have not reached any agreements on so-called "social management" questions (which include headquarters and CEO, as well as chairman, president and other members of the management team), nor have the two carriers worked out "exchange ratios" -- in essence, the terms of a stock conversion.
The source confirmed that both sides have been engaged in conversations for the last two months.
While US Airways appears ready to work out the details, United could still decide to remain independent, this source said. There is no formal timetable, but the expectation is that United could make a decision by end of the month (other media reports this week suggested that United has also been considering an "alliance" with Continental Airlines, as opposed to a formal merger). There are concerns that the longer talks drag out, the higher the risk is that the US Airways-United hookup will not meet antitrust approval in Washington, D.C. US Airways believes there is still time to gain regulatory approval from the current administration, this source said, but "not indefinitely."
There are also concerns about labor integration issues.
United has a pilot on its board, and United's pilots union already has said a merger with US Airways should be a "last resort." Flight attendants from both airlines have called the discussions "foolhardy." And the new union representing pilots at US Airways issued a press release yesterday saying United Airlines "may not be the best dance partner" for the Tempe, Ariz.-based carrier, citing United's "mounting losses" and "dismal balance sheet."
US Airline Pilots Association President Stephen Bradford said his group "will not support any moves toward a follow-on merger until management finishes the job of our last merger" -- a reference to the 2005 union of the old US Airways and America West Airlines and how that integration is still hampered by labor concerns.
A majority of pilots at US Airways voted last month to unseat the Air Line Pilots Association as their union representative and installed the newly-formed US Airline Pilots Association based in Charlotte, N.C. "Regarding United Airlines," said USAPA's Mr. Bradford, "their financial health is a major concern."
If savings resulting from a merger of US Airways and United mean cutting flights while planes are filling at record levels, "we simply aren't interested," he added.
A US Airways spokesman declined comment. A United spokeswoman said "we don't comment on rumors or speculation."
Despite cutting hundreds of flights this decade, US Airways is still the largest carrier at Pittsburgh International Airport and still employs about 1,800 people, down from more than 12,000 prior to the Sept. 11, 2001, terrorist attacks.