United Searches for Options to Get Out of Current US Airways Deal

United Airlines wants to kill its current deal to buy US Airways in an effort to get a lower price and possibly new partners to serve the Washington area, sources said Friday.

United’s desire for a new deal comes more than a year after it announced the $12.3-billion plan to acquire the Arlington, Va.-based carrier in what was one of the biggest merger proposals in U.S. aviation history. Since then, mounting government resistance and a weakened economy have dramatically changed the prospects for the acquisition.

United is considering a range of changes to the deal, including selling some routes to low-fare carriers such as Air Tran or Frontier to generate competition, buying only parts of US Airways instead of the whole airline and altering its plans for the Washington-New York-Boston shuttle, according to sources.

United has not officially called off the deal, but there have been several signs that United considers it too expensive in today’s economic climate. Parent UAL Corp.’s shares have fallen 41% from $60.38 the day before the accord was announced to close at $35.15 on Friday on the New York Stock Exchange. US Airways shares have fallen slightly over the same period, from $26.31 to $24.30, also on the NYSE.

United must soon make a decision on its next move. The airline must determine by July 11 whether to notify the Justice Department of its intention to go ahead with the acquisition. Failure to do so will automatically doom the current agreement because the airlines promised antitrust regulators they would provide 21-day notice before closing the acquisition.

Under the contract, neither side can alter the accord until Aug. 1. After that date, either party can either walk away or restructure the deal. Any change in United’s current offer of $60 a share would have to be approved by US Airways’ shareholders. If United were to pull out, it would have to pay US Airways $50 million.

Rick Dubinsky, chairman of United’s pilot union and a member of United’s board of directors, said it was unlikely that United would make the July 11 deadline for notifying the Justice Department. He said it also was unlikely that United would make another offer to acquire US Airways in its entirety.

“The only way United is going to get the parts of US Airways it wants, it appears, is to purchase the parts and not the whole,” said Dubinsky, who said he was speaking as the leader of the pilot union.

Neither United nor American Airlines, which was brought into the deal in January, would comment for the record Friday.