Continental Airlines Chooses Not to Merge

[Flopgut]

LOL. This is funny. We may be toast. Maybe not. Either way is fine with me. But this sounds like 03 all over again. Many assume CAL doesn't want to merge because of UALs books. It could be that they didn't want to merge under the terms presented. But hey, UAL might suck but you CAL guys don't walk around acting like you're SWA, FDX, and UPS rolled into one now. The whole industry sucks. That would include your place too. Good luck and congrats on having management that has wanted to run an airline for the past few.

Not wishing UAL any ill will. This is not entirely bad news for UAL, right? In fact, this should be bad news only for Tilton!! Any member of the UAL board who was willing to give this pi$$brain the benefit of the doubt on leadership should be ready to throw him out after this. Even if they are all his friends. He sucks!!

UAL was a great airline and likely will be again.

 

[Jonny Sacko]

UAL will be just fine, in my eyes. The pilots will now stand up like the 2000 contract times. Pissed, pissed, pissed. We will all see them shine again. Signs saying "DUMP TILTON" should be out soon, I hope. He's been an embarrassment since they came out of bankruptcy. UAL pilots, it's up to you. Dump that guy loudly, and then maybe we all can yank Prater out and the world will be whole again! Alright fellas I'm off to the bar with my rose colored glasses on, but I'm happy!

 

[Sedona16]

Any guessing what UAL's stock will do tommorow?

 

[Sonny Crockett]

Any guessing what UAL's stock will do tommorow?

It's going down FASTER then a Baron full of Doctors!

 

[Sedona16]

Just a recap of Tilton and a string of bad management the last time UAL was taken into BK. Warning....you will get pissed if you watch this to the end.

http://www.pbs.org/wgbh/pages/frontline/retirement/view/2_hi.html

 

[lookin4better]

Good news for Continental!

Any guesses when the hiring will start back up?

 

[Sedona16]

Continental Abandons Merger Talks With United

By ANDREW ROSS SORKIN and MICHELINE MAYNARD
Published: April 28, 2008
Continental Airlines said Sunday that it had abandoned merger talks with United Airlines and was planning to remain an independent carrier, a blow to lengthy efforts by United to find a merger partner.

Times Topics: Continental | UAL | Air Travel
Continental’s decision, announced by the airline Sunday afternoon, will change the complex game of musical chairs that the airline industry is playing after the merger announcement last week by Delta Air Lines and Northwest Airlines.
Continental’s move was a stunning development for United’s parent, UAL, which had been negotiating in expectation of reaching a deal by late this week. As recently as Friday, it looked as though Continental, based in Houston, and United, based outside Chicago, were on the way to reaching a merger agreement.

Continental decided to drop the discussions after UAL announced worse-than-expected earnings, which sent shares falling last week. On Tuesday, United said it lost $537 million during the first quarter, on sharply higher costs for jet fuel. The airline, which spent more than three years under bankruptcy protection earlier this decade, said it would cut flights and eliminate a further 1,000 jobs. Directors at Continental, who met Sunday afternoon, feared that a merger with United could put their company in peril.


Continental, which had been expected to take management responsibilities in a deal with United, survived two bankruptcy filings of its own in the 1980s and 1990s, and has been considered one of the industry’s best-run carriers.

With the United-Continental deal scrapped, a new set of pairings is likely to take place. UAL is expected to push to reach a deal with US Airways, with which it had also been discussing a merger, people involved in the talks said.

In a statement, United's chief executive, Glenn F. Tilton, said on Sunday night: "Consolidation is under way.

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 touch choices necessary to create value for our shareholders and benefit our employees and customers."

Meanwhile, Continental is expected to press ahead with preliminary talks to create a three-way alliance — short of a full merger — with American Airlines and British Airways.

In a letter to Continental employees, Lawrence W. Kellner, the airline’s chief executive, and Jeffery A. Smisek, its president, wrote: “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 stand-alone basis.”

They said they worried a deal would put company’s operational and financial strengths “at risk.” They also hinted at forming a new alliance, saying, “We are considering alternatives to SkyTeam” — an alliance with Delta and Northwest — “as we carefully evaluate which major global alliance will be best for Continental over the long term.”

The executives did not mention American or British Airways. The two sides had agreed on several issues in their talks. Mr. Kellner would have run the combined company, while United’s chief executive, Mr. Tilton, would have stepped away from day-to-day operations.

Mr. Tilton had advocated strongly for industry consolidation, saying it was the only solution to help the struggling airlines become consistently profitable. US Airways’ chief executive, W. Douglas Parker, has also pushed for consolidation, making an unsuccessful hostile bid last year for Delta before it emerged from bankruptcy protection.

Mr. Kellner, in his letter, at least seemed sympathetic to the industry’s plight, telling employees, “Every U.S. carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing U.S. economy and a weak dollar.”

United’s stock closed at $21.43 on Monday. That evening, Delta and Northwest announced their merger plans. On Tuesday, United’s shares closed below $14. They ended the week at $15.21, off 29 percent for the week.

On Tuesday, United’s chief financial officer, Frederic F. Brace, said repeatedly that the airline was in compliance with the covenants of its bank agreements. But, Mr. Brace added, “With the recent spike in fuel prices and the softening economy the trajectory of our covenant coverage is downward.” Because of steps the airline was taking to cut costs, he said, “it’s really very difficult to predict whether we will have an issue or not.”

On Wednesday, after the sharp drop in its stock, United issued a statement saying that it was in compliance with the terms of deals governing its credit arrangements with banks, including JPMorgan Chase, Citibank and Credit Suisse.

Analysts said the situation created doubt about United’s health, an issue that has hovered around United since it emerged from bankruptcy protection in early 2006. That concern was a reason talks between Delta and United, which took place while Delta was under bankruptcy protection earlier this decade, never gained traction.

Meanwhile, Continental’s next steps are far from clear. Although it planned to pursue discussions with American about joining its alliance with British Airways, the corporate cultures of Continental and American differ significantly. American, as the nation’s biggest airline until the Delta-Northwest deal is completed, is likely to want to dictate the terms under which the much-smaller Continental comes on board.

At the same time, Continental’s membership in the SkyTeam alliance could offer much greater reach than a deal with American and British Airways. The new Delta will be bigger than American, and other members in SkyTeam include KLM and Air France, which have a broader base than American and British Airways across Europe and the rest of the world.

Meanwhile, in a further sign of the industry's problems, Eos Airlines, a business-class carrier, said Sunday that it had filed bankrupcy protection and ceased flying. Eos said it filed for Chapter 11 protection in New York on Saturday. Eos offered business class flights between New York's JFK Airport and Stanstead Airport in London. It was the latest in a series of small airlines to file for bankruptcy protection in the last few weeks.
Eos made its final flights from London to New York on Sunday, and canceled flights in the opposite direction. It began flying in 2005.

 

[Jonny Sacko]

I can't believe how pathetic the board of directors/President/Vice Presidents/Manager's are. There should be a complete be-heading of that group Monday morning. That company is ONLY as good as those people. The pilots/FA's/Mechanics can't run the office too!

How does this happen, and that IDIOT will get some bonus!

 

[CALDC9]

I am very happy CAL is staying Independent for now.
We gave up so much much over the years to lose our indentity.
Best wishes for the UAL people.

Time to breakout a special bottle of Brunello from my
last Rome trip.

 

[SWA/FO]

reminds me of Midway Airlines...once NWA backed away from their purchase - they were toast.