More Airline Mergers?

Oct 29 2009 More Airline Mergers? BY admin TAGS United

 

The "M" word has been out of fashion lately, but the CEO of United Airlines is uttering it again: merger.

 

The Financial Times reports: "Glenn Tilton told the Financial Times that consolidation should still play a role in shaping the US aviation industry's future, adding that balance sheets had "probably" improved enough to help finance prospective merger plans. "There is still too much capacity in the US market," he said."

 

When Tilton brings up the topic of "too much capacity," here's what he's saying: the airlines could charge higher fares if there were fewer seats in the air. It's the economics law of supply and demand: fewer seats mean higher fares; more seats mean lower fares.

 

Tilton has other motives as well. Read this recent story about the general state of United Airlines.

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