United Airlines is abandoning its planned $4.3 billion purchase of US Airways, citing regulatory problems and the worsening economy, according to published reports.
United told US Airways at a meeting of the UAL board of directors last week that it wishes to discuss terminating their agreement prior to Aug. 1, which is the first day either side can alter the deal, The New York Times and The Wall Street Journal reported on their Web sites Sunday, citing sources familiar with the discussion.
``We are at the point where we don't believe we can get the deal through the antitrust review process,'' a United executive who declined to be named told The New York Times.
If United ends the agreement, it will have to pay US Airways a breakup fee of $50 million.
Representatives for both airlines Sunday declined to comment to The Associated Press on the reports, which also appeared in varying degrees in The Washington Post and the Charlotte Observer over the weekend. Both papers also cited sources familiar with the discussions.
In an effort to ease anti-competitive concerns and ensure government approval, United agreed in January to sell some US Airways assets to American Airlines, including half of US Airways' Washington-New York-Boston shuttle.
There also had been speculation of more selloffs coming. At one point, United considered dumping its proposal for DC Air, the airline to be headed by Black Entertainment Television founder Robert L. Johnson, which United proposed creating to try to appease antitrust regulators.
But Justice Department lawyers appeared to remain concerned about the concentration of market power in Washington and other markets, prompting Transportation Secretary Norman Y. Mineta last month to say he expected the government to reject the proposed merger.
A weakening economy is also apparently hurting UAL, which is based in Chicago. Sources told the Journal that the airline was unwilling to engage in a costly, complicated merger in the worsening economic climate.
United, the nation's second-largest airline, reported a worse-than-expected first quarter loss of $313 million on revenues of $4.42 billion and has already said it expects a double-digit decline in revenue for the second quarter.
The deal values US Airways at about $60 a share, more than double the US Airways current stock price of $24.30. Shares of UAL closed Friday at $35.15, down $1.21, or 3.6 percent.