Continental Decides not to merge..

[youngflyer]

April 27 (Bloomberg) -- Continental Airlines Inc., the fourth-largest U.S. carrier, has decided against merging with another airline and to remain independent.
Continental disclosed the decision by its board in a letter today to employees of the Houston-based airline. The board unanimously approved a recommendation by Continental's executives following a ``comprehensive'' review that included outside financial and legal advisers, the letter said.
U.S. carriers are feeling more pressure to merge as they face further financial losses, continued high fuel prices and slowing demand. Delta Air Lines Inc. announced this month that it would acquire Northwest Airlines Corp. Continental earlier had merger talks with UAL Corp.'s United Airlines.
``The risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a standalone basis,'' Chief Executive Officer Larry Kellner said in the letter. ``While some would prefer to see Continental pursue a merger, we strongly believe we have made the right decision.''
A combination with another carrier could place at risk Continental's ``significant cultural, operational and financial strengths,'' Kellner said in the message to the airline's 45,000 employees.
SkyTeam
Continental will continue to review its membership in the global SkyTeam alliance, which also includes Delta and Northwest, along with Air France-KLM.
Delta, Northwest and Air France-KLM, Europe's largest airline, earlier this month won approval from U.S. regulators to collaborate on international flights within the alliance. The decision allows them to funnel passengers to each others' networks and to operate more like a single entity by cooperating on route planning, marketing and setting fares.
The decision put new pressure on AMR Corp.'s American Airlines, which doesn't have such immunity with British Airways Plc, its primary partner in the competing Oneworld alliance. Continental held preliminary talks with American earlier, a person familiar with the matter has said.
A combination of Continental and Chicago-based United would have surpassed the planned Delta-Northwest tie-up as the world's largest carrier. That spot, based on passenger traffic, is now held by American.
A Natural
Analysts had seen a Continental-United link as a natural combination after the Delta-Northwest plan was announced. United Chief Executive Officer Glenn Tilton has advocated consolidation in the U.S. airline industry for at least four years, and Continental began reviewing its options after Delta paired with Northwest.
The April 15 Delta-Northwest announcement allowed Continental to redeem a special preferred share that gave Northwest veto power over any merger involving Continental. Northwest acquired the share in 2000, when it gave up a controlling stake in Continental because of opposition from U.S. antitrust regulators.
United's shares tumbled 37 percent on April 22 after the airline reported a first-quarter loss wider than analysts expected and some investors questioned whether the carrier had sufficient cash to meet loan covenants. United, which said the concerns were unfounded, is cutting 1,100 jobs and further reducing capacity after the loss of $537 million.
Continental, which had a first-quarter loss of $80 million, said on April 17 it would ground 14 older, less fuel-efficient aircraft on top of 34 it already planned to stop flying and would trim capacity by an undetermined amount at its regional airline partners.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aK7mFLTLJh3g&refer=home

 

[SlumTodd_Millionaire]

Well, that's good news. I think you'll find Doogie Parker going after UAL now, though. Doesn't bode well for my friends at UAL, but better than UAL dragging down CAL with them.

 

[OldTownPilot]

Look at the hand...Look at the hand...Look at the hand...Look at the hand...*slap* with the other one.

 

[BobDDuck]

The irony of a UAL-AAA merger would be that despite United being able to change ALPA merger-frag policy to prevent a DOH situation with Airways back in 2000, they are once could be stuck with DOH because of the Allegheny-Mohawk clause. Although seeing as Airways doesn't actually have a real seniority list yet (official anyways) I don't know how that would work.

Strange days indeed.

 

[SlumTodd_Millionaire]

The irony of a UAL-AAA merger would be that despite United being able to change ALPA merger-frag policy to prevent a DOH situation with Airways back in 2000, they are once could be stuck with DOH because of the Allegheny-Mohawk clause. Although seeing as Airways doesn't actually have a real seniority list yet (official anyways) I don't know how that would work.

Strange days indeed.

Allegheny-Mohawk doesn't say anything about DOH. It simply says "fair and equitable integration." The definition of "fair and equitable" is up to each arbitrator. I'll laugh my ass off if it goes back to Nicolau. :rotfl:

 

[OldTownPilot]

Of course "fair and equitable" to that arbitrator could be DOH

 

[kellwolf]

But....but....Chris Ford said it was a done deal!

 

[WestIndian425]

But....but....Chris Ford said it was a done deal!

Did he now?!

 

[SoCalAprch]

Well if Ford said it was so then that letter must be a fake!!

 

[OldTownPilot]

So much for reputable inside sources

 

[Chris_Ford]

But....but....Chris Ford said it was a done deal!

And the United IT department had an impressive website about the merger already made. Saw it with my own eyes. Methinks UAL didn't find out about this until today themselves.

 

[Chris_Ford]

And remember, DL/NW was called off once too...

 

[SlumTodd_Millionaire]

Of course "fair and equitable" to that arbitrator could be DOH

Not likely.

 

[Trip7]

I think CAL will be fine. They have a growing intl operation, pretty fuel efficient fleet, and a scope clause that doesn't allow for 5 billion RJs to be running around. They should be able to weather the storm alone.

 

[kellwolf]

And the United IT department had an impressive website about the merger already made. Saw it with my own eyes. Methinks UAL didn't find out about this until today themselves.

So, what you're saying is....you might have been wrong?