Originally Posted by ContinentalFan
In its most recent proxy statement, Continental reported that it has two classes of stock. There are 66.85 million shares of class B stock outstanding and one share of Class B preferred which is owned by Northwest Airlines, Inc. The preferred shares are non-voting.
The proxy statement isn't clear on exactly how NW can exercise its rights over CAL. The proxy refers to "certain business combinations." Interestingly if NW tries to transfer or encumber the shares, then the rights are lost. If NW were to merge the rights disappear or if the alliance were to terminate. Again, it's not clear exactly what NW gets to block. I know that there is a standstill agreement in place, but I am not sure if NW is in a position to exercise its rights.
From what I understand, NWA gets to block: i) any potential change of control of Continental; ii) acquisition by Continental of another major airline. The alliance agreement effectively "does the rest" with respect to keeping CO on lockdown, by requiring CO to remain a member of the same global alliance as NWA, a requirement for three years' advance notice if either party intends to dissolve the alliance, etc.