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Continental rules out merger – for the moment
Continental Airlines has ruled out a merger with another carrier – thought to be United – for the time being.
In a message to its 45,000 staff, chairman and CEO Larry Kellner and president Jeff Smisek admitted that every US carrier was under “enormous pressure†from rising fuel prices, the slowing US economy and weak dollar.
However, they said: “In the current industry environment, the best course for Continental is to not merge with another airline at this time.â€
United Airlines’ chairman Glenn Tilton responded by saying: “Consolidation is underway – ensuring you have the right partner is everything.
“We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers.”
Continental’s decision came after a “comprehensive review†of strategic alternatives, including its involvement in the SkyTeam alliance.
“The board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a standalone basis,â€a statement said.
“We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths – which we believe would be placed at risk in a merger with another carrier in today’s environment.
“We will, however, continue to review potential alliances and our membership in SkyTeam.
“We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term.
“In today’s harsh environment, we must continue to adjust our business model to ensure we successfully navigate through these difficult times, so that in the future we can once again grow and prosper.â€
by Phil Davies
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