update on US Airways - UAL merge

THE ASSOCIATED PRESS

Published: May 29, 2008

CHICAGO

The chief executives of United Airlines and US Airways are scheduled
to meet today as talks aimed at combining the carriers progress despite
concerns that threaten to scuttle the deal, according to two people
briefed on the discussions.

The attempted pairing, which would create the world's largest
carrier, faces numerous hurdles but is still possible despite published
reports that the talks may have broken down, the people told The
Associated Press yesterday.

One person, who did not want to jeopardize the talks and requested
anonymity, said that Glenn Tilton, the chief executive of United parent
UAL Corp., and Doug Parker, the CEO of US Airways, will meet to discuss
some of the issues holding up the deal and how to resolve them.

The other person confirmed the CEOs' meeting and said that there is
still key opposition to the deal within United despite management's
longtime push for consolidation. That person was not authorized to
represent the airlines publicly and spoke on condition of anonymity.

A key sticking point is labor complications that could delay any
cost savings from a deal. US Airways still has not reached agreements
with all of its unions after its 2005 combination with America West
Airlines.

United declined to comment yesterday. On Tuesday night, the airline declined to comment on a report by The New York Times that the talks appeared to have fallen apart. The Chicago Tribune had a similar report.

Shares of US Airways Group Inc. climbed more than 5 percent in after-hours trading yesterday after The Wall Street Journal
first reported that the CEOs planned to meet. The shares gained 22
cents in electronic trading after falling 36 cents, or 8.1 percent, in
the regular session to close at $4.08.

UAL shares fell 27 cents, or 3.3 percent, to close at $7.91, then gained 9 cents after-hours.

United and US Airways have been in preliminary talks for months, but
the pace picked up last month after Delta Air Lines Inc.'s acquisition
of Northwest Airlines Corp. was announced and Continental Airlines Inc.
said it decided not to pursue a merger with United.

Together, United and US Airways would surpass the combined Delta-Northwest as the nation's largest carrier.