Air mergers may take off

BOSTON — The head of United Airlines' parent company said Tuesday he no longer feels like a voice in the wilderness in arguing that airlines must consider consolidation to withstand competitive challenges, including rising fuel costs.

"We at United have been talking about this for the past three to four years, and there's been very little company among us," UAL Corp.'s Glenn Tilton told reporters after delivering a speech to business leaders at the Boston College Chief Executives Club.

"Now, we have virtually everybody saying the same thing," Tilton said, noting that several rival airline CEOs suggested on third-quarter conference calls that the time may be right for industry mergers and acquisitions. "I think we've come a long way, when you consider that early on, we were the only people saying that."

United has been the focus of recent industry merger rumors, including the possibility of pairing with Delta Air Lines Inc.

Tilton wouldn't say whether he or other executives at the nation's second-largest carrier have been in any talks with Delta or other potential partners.

But he did say that he understood the rationale for a United-Delta pairing — a case that a hedge fund made Nov. 16 in a presentation to other investors in the two airlines. The presentation was by Gordon Bethune, an adviser to hedge fund Pardus Capital Management LP and former chief executive of Continental Airlines.

"I think that's Gordon Bethune's assessment of the combination of companies that have very few overlaps," Tilton told reporters. "So on that basis, you would say that any company combination that has relatively few overlaps is going to have fewer personnel redundancies, and fewer job losses, and certainly no worries about redundant service to small communities or medium-size communities."

But Tilton declined to comment on whether he thought a United-Delta pairing would be a good fit.

Asked why no airline merger proposals had surfaced recently despite growing pressure to cut expenses amid high fuel costs, Tilton said, "It's a very difficult thing. Multiple constituencies have to agree that it's appropriate."

Industry consolidation "would be a plus, yes, absolutely," said Tilton, chairman, president and chief executive of Chicago-based UAL.

On Nov. 14, an official with knowledge of the situation told The Associated Press that UAL and Delta had been discussing a combination that would keep the United name and the corporate headquarters in Chicago. Delta and United later denied they had any merger talks.