Continental Rejects Merger Overtures
Move Marks RebukeTo Rival United; Shifting Alliances?
By SUSAN CAREY and MELANIE TROTTMAN
April 28, 2008; Page A1
Abruptly ending talks with United Airlines parent UAL Corp., Continental Airlines Inc. said it would stay independent for the time being despite efforts by rival carriers to merge.
The Houston-based airline didn't disclose details of talks in its statement late Sunday and didn't name potential partners. But its move was seen as a rebuke to Chicago-based UAL, which has been trying to interest Continental in a marriage for years.
UAL had recently entered formal merger talks with Continental, said people familiar with the matter, giving UAL the impression that it had the inside track on striking a deal with one of the U.S. industry's healthiest carriers.
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Continental is seen as a prize by many in the industry. It has a powerful hub in Newark, N.J., serving Europe and the domestic market, a strong network to Latin America from its hub in Houston, a seasoned management team, good labor relations, a young, fuel-efficient fleet, and a reputation for better service than some of its peers.
Those same qualities also make Continental an attractive partner for global airline alliances, and the company said Sunday it was interested in reviewing alternatives in that area. Such alliances stop short of mergers, but they allow airlines to more easily share passengers among each other. Over the years, major airlines around the globe have adopted such agreements to expand their reach.
American Airlines parent AMR Corp. has been trying to interest Continental in such an alliance, both with itself and within oneworld, a global marketing alliance anchored by American and British Airways PLC, said the people familiar with the matter.
Continental is currently a member of the competing SkyTeam alliance. Delta and Northwest are also part of that alliance, and their merger agreement could create one outsize airline that eclipses its smaller partner.