UAL Scrapping Plan to Buy US Airways

More than a year after UAL Corp.’s United Airlines agreed to acquire US Airways for $4.3 billion, the companies said they’re in talks to scrap the deal. Although the carriers didn’t provide details, people close to the situation said the merger would have raised serious antitrust objections from the Justice Department and the airlines weren’t prepared to accept the terms necessary to get the deal closed.

United and US Airways--the nation’s second- and sixth-largest carriers, respectively--also are having to deal with the economic slowdown and an industrywide drop-off in business travel, which might have made the marriage less appealing. UAL also slashed its stock dividend.

Even so, both airlines probably will find merger partners, some analysts said. Speculation is high that US Airways, which mainly serves the Northeast corridor, might be sold in pieces.