ATLANTA - US Airways has broken off talks with United Airlines, leaving United to pursue a deal with Continental Airlines that would reshuffle the lineup in the airline industry.
US Airways, the nation's sixth-largest carrier, didn't specifically say Thursday why it ended talks with United, although Continental's involvement appears to have played a role.
Renewed discussions about airline consolidation come as fuel prices are on the rise. While demand for air travel has improved from recession lows, major carriers are still struggling to turn profits. Several major carriers, including Continental, reported first-quarter losses this week.
Analysts have long maintained that, despite deep capacity cuts that occurred when demand was weak, the airline industry needs to further shrink to become consistently profitable.
United and Continental considered combining in 2008 -- the same year Delta Air Lines completed its acquisition of Northwest Airlines -- until Continental broke off talks.
US Airways, meanwhile, is the product of one combination and has long sought another.
"US Airways was ready to sign a deal with United when they found out United was more interested in signing a deal with Continental," said a person who was briefed on the discussions.
The person was not authorized to speak publicly, and spoke on condition of anonymity.
