Newsroom » HAS Newsroom

Continental Airlines opts against merger
By: AFP
April 28, 2008

Continental Airlines said Sunday it has chosen not to merge with another carrier at this time, shunning the route taken by its US rivals Delta and Northwest which announced plans to join and become the world's biggest airline.

"Our board of directors met today and has unanimously supported management's recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time," Continental chief executive Larry Kellner said in a statement.

"The risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a stand-alone basis."

The announcement comes amid extremely turbulent times for airlines as they consider consolidation as a prime way to dampen what Continental acknowledged was an economic triple threat to the industry.

"Every US carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing US economy and a weak dollar," Kellner said.

"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."

On April 15 Delta Air Lines and Northwest Airlines unveiled a 17.7-billion-dollar merger plan approved by their boards. Eight days later the pair announced a combined 10.5 billion dollars in losses.

Continental said it would keep its options open in order to remain competitive.

"We will, however, continue to review potential alliances," Kellner said. Continental, which bills itself as the world's fifth largest airline, has been touted as considering a merger as far back as 2006 with heavyweight United Airlines.

United has already had one month of in-depth merger talks with US Airways, but recently began parallel merger discussions with Continental as well, The Wall Street Journal reported, citing people familiar with the talks.

It also reported that Continental had exploratory discussions in February with American Airlines.

Copyright © 2008 -AFP