Continental says no to United


#1

*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.


#2

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:


#3

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.