United drops bid for US Airways

By CNNfn's Fred Katayama

NEW YORK (CNN) -- UAL Corp., the parent of United Airlines, is dropping its plan to buy US Airways Group, a source familiar with the issue told CNNfn Sunday.

The source blamed regulatory opposition to the deal for the decision to drop the plan.

"We tried very hard and worked very creatively proposing various solutions at different times," the source said. "But we have really concluded it will not be successful. We cannot get antitrust clearance."

One big factor causing regulators to oppose the deal, the source said, was concern that the combined airlines would dominate the market in the nation's capital, among other cities.

Spokesmen for the two companies refused to comment.

United, the world's largest air carrier, and US Airways announced the proposed merger in May 2000.

The nearly $12 billion deal to combine the two companies would have made United more than twice the size of the next largest carrier.

It included a buying price of $4.3 billion, plus the assumption by United of $1.5 billion in net debt and $5.8 billion in aircraft operating expenses totaling $11.6 billion.