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By Kyle Peterson and John Crawley
April 8, 2010 11:08 PM EDT
United Airlines' pilots union lashed out against efforts to merge the airline with US Airways Group
Tough antitrust enforcement could also pose another stumbling block to a merger, which would form the world's second-largest airline after Delta Air Lines
But the possibility of consolidation in the industry spurred airline shares higher on Thursday, although US Airways and United parent UAL Corp
Chicago-based United, the No. 3 U.S. airline, has a $3.39 billion market value, based on Thursday's close. Tempe, Arizona-based US Airways, the No. 6 U.S. airline, ended the day with a $1.22 billion market capitalization.
Sources with knowledge of the situation told Reuters the negotiations began more than a month ago, although much of the groundwork was laid in 2008 when the two held similar talks.
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The sources said the parties are currently focused on general themes, and issues like deal structure and management will be discussed in coming weeks.
The parties were said to be mindful of hurdles to a successful merger, including competition concerns and serious labor questions at both carriers involving pilots.
"Everybody is aware of the problems," said one source.
United's pilots said Thursday they were vehemently opposed to a merger, while US Airways' pilots said they were open to a merger and wanted to be part of the discussions.
United's flight attendants said they would not support a deal that would "distract from contract negotiations."
Goldman Sachs
All three banks declined to comment.
UAL shares closed up 6.8 percent at $20.23 on Nasdaq. US Airways shares gained 10.7 percent to finish at $7.55 on the New York Stock Exchange.
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