Continental says no to United


*NEW YORK, April 27 (Reuters) - Continental Airlines Inc (CAL.N: Quote, Profile, Research) has called off talks with United Airlines (UAUA.O: Quote, Profile, Research) because of the other carrier’s weak financial condition and a feeling that a merger would threaten its own financial health, a source briefed on the matter said on Sunday.

The source also said Continental was in “advanced talks” with British Airways PLC (BAY.L: Quote, Profile, Research) and American Airlines (AMR.N: Quote, Profile, Research) about a potential alliance, with plans to seek antitrust immunity.

American did not immediately return a call seeking comment and Continental was not reachable for comment. United Airlines Chief Executive Glenn Tilton, who has been a proponent of consolidation, said the company’s strategy was consistent.

“Consolidation is underway - ensuring you have the right partner is everything,” he said in a statement. “We will pursue all options to ensure a strong, sustainable future for our airline.”

Sources had told Reuters earlier this month that United was also in serious merger talks with US Airways (LCC.N: Quote, Profile, Research).

Continental’s decision comes after Delta Air Lines (DAL.N: Quote, Profile, Research) and Northwest Airlines (NWA.N: Quote, Profile, Research) said nearly two weeks ago they planned to merge and become the world’s largest airline, seeking to counter skyrocketing fuel prices, a weak economy and growing competition from European carriers as trade barriers fall on trans-Atlantic travel.

Continental said on Sunday in a letter to its employees it has chosen not to merge with any other airline at this time but will continue to consider an alliance with other carriers*

I think United is really in trouble. I think the other proposed merger UA/US does nothing to help United. This is going to be an interesting year for the airlines.


Hope US doesn’t get UA, would hate it!

As US worker, just want more flights to Canada (PHL-YYZ), all B737s phased out, more E190 are coming (N957UW and N958UW), already ordered, the age of the fleet is getting little younger. :smiley:


prior to UA’s recent big drop in stock price their market cap was significantly higher than CO’s. Now they’re similar. It really changed the dynamic of the deal. It’s not a “business health” decision, it’s a finance one. The new UA stock would simply be too diluted after the deal to be appealing to the CO stockholders.