UAL chief says airline mergers "would be a plus"

By Scott Malone

BOSTON (Reuters) - The chief executive of UAL Corp (UAUA.O: Quote, Profile, Research), parent of No. 2 U.S. carrier United Airlines, said on Tuesday consolidation "would be a plus" for the troubled U.S. airline industry.

"It's a very difficult thing; multiple constituents have to agree that it's appropriate," said Glenn Tilton, the airline's chairman and CEO. "When ... the various constituents who have a stake in it all come to the conclusion that it should, then we'll move forward."

Asked if consolidation would be good for U.S. carriers, he replied, "I think it would be a plus, yes, absolutely."

Recent media reports have suggested that UAL is interested in a merger with Delta Air Lines Inc (DAL.N: Quote, Profile, Research). Delta has denied any talks with UAL.

Hedge fund Pardus Capital Management LP, which owns a stake in both airlines, is advocating a merger. Pardus is advised by Gordon Bethune, former CEO of Continental Airlines Inc (CAL.N: Quote, Profile, Research).

"That's Gordon Bethune's assessment of a combination of companies that have very few overlaps," Tilton told reporters after addressing the Boston College Chief Executives Club. "So on that basis, you would say that any company combination that has very few overlaps is going to have fewer personnel redundancies, so fewer job losses and certainly no worry about redundant service to small communities or medium-sized communities."

Tilton declined to comment on any talks with Delta or to talk about specific possible combinations in the industry.

U.S. airlines have been hard hit by high oil prices, which have driven up the cost of jet fuel. The airlines have raised fares to try to offset higher fuel costs, but some observers have called for mergers as a way to reduce capacity and cut costs.

(Editing by John Wallace)