Airline tie-up may reshape industry in US

ATLANTA, Georgia - UAL Corp's United Airlines and US Airways Group Inc, both of which filed for bankruptcy last decade, are holding talks on a merger that would reshape the US industry, sources said.

Discussions began in mid-February on the tie-up, which would help United steer travelers to international flights from US Airways' domestic routes, said one of the sources, who asked not to be identified because the negotiations are private. Spokespersons for the companies declined to comment.

Combining United and US Airways would create the second-largest US carrier and put pressure on AMR Corp's American Airlines, now No 2, and Continental Airlines Inc, which held merger talks with UAL in 2008. Wider route networks boost revenue by allowing airlines to funnel in more passengers. British Airways Plc, Europe's No 3 carrier, and Spain's Iberia Lineas Aereas de Espana SA said on Thursday they signed a definitive agreement to a $7.5 billion merger.