*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.