JonnyKnoxville
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United, Continental in alliance talks
Associated Press (USA TODAY)
May 15, 2008
United Airlines and Continental Airlines are talking about forming an alliance to gain some benefits of working together withoutgoing through a merger, which Continental rejected last month, a person close to the talks said Wednesday.
United is still pushing ahead with negotiations aimed at acombination with US Airways but would not pursue both deals, said theperson, who was not authorized to speak about the matter and requested anonymity.
United, the nation's second-largest carrier, is expected to take up the matter Thursday at a meeting of parent UAL's board ofdirectors.
No vote is expected, and the person close to the talks said a decision is not imminent on which of three options currentlyunder consolidation United will pursue: consolidating with US Airways,forming an alliance with Continental, or remaining a stand-alone carrier.
Chicago-based United had been close to combining forces with Continental until the Houston-based carrier said April 27 that itwould not seek a merger. But Continental left the door open to analliance with another carrier.
"As we've said over the last few weeks, we are examining our alliance relationships as we think it's important that we be amajor player in one of the three major global airlines alliances,"Continental spokeswoman Mary Clark said.
United spokeswoman Jean Medina declined comment.
An alliance, in which the companies would work together inmany ways but not merge their operations, would provide a way for themto raise more revenue without the integration problems that come withformal consolidation. It could set pricing and schedules and have U.S.antitrust immunity.
Mergers also can be highly disruptive, costly and risky for airlines. US Airways is still operating basically as two airlinesmore than two years after combining with America West because of disagreements between unions.
Continental is also still in discussions about an alliance with AMR's American Airlines and British Airways, said an official withknowledge of those talks. That person also was not authorized todiscuss the matter and requested anonymity.
The official said it would not be unusual for Continental to be considering alternatives, but that the British Airways-Continental-American talks are progressing and don't appear injeopardy. British Airways publicly disclosed the talks April 30.
Bob Mann, an independent airline consultant based in Port Washington, N.Y., said he doesn't think an alliance between United andContinental is likely because it wouldn't go far enough to solve the carriers' cost and capacity issues.
"The United guys are very much heading in the direction of something that will really allow them to downsize the airline," hesaid. "We're talking about large capacity cuts. ... The alliancedoesn't get to the point where you can really do the capacity-cutting."
The airlines are under more competitive pressure in the wake of Delta Air Lines Inc.'s pending deal to acquire Northwest Airlines.
Combining United and US Airways would create a carrier rivaling the Delta-Northwest tandem for the title of world's largestairline.
Associated Press (USA TODAY)
May 15, 2008
United Airlines and Continental Airlines are talking about forming an alliance to gain some benefits of working together withoutgoing through a merger, which Continental rejected last month, a person close to the talks said Wednesday.
United is still pushing ahead with negotiations aimed at acombination with US Airways but would not pursue both deals, said theperson, who was not authorized to speak about the matter and requested anonymity.
United, the nation's second-largest carrier, is expected to take up the matter Thursday at a meeting of parent UAL's board ofdirectors.
No vote is expected, and the person close to the talks said a decision is not imminent on which of three options currentlyunder consolidation United will pursue: consolidating with US Airways,forming an alliance with Continental, or remaining a stand-alone carrier.
Chicago-based United had been close to combining forces with Continental until the Houston-based carrier said April 27 that itwould not seek a merger. But Continental left the door open to analliance with another carrier.
"As we've said over the last few weeks, we are examining our alliance relationships as we think it's important that we be amajor player in one of the three major global airlines alliances,"Continental spokeswoman Mary Clark said.
United spokeswoman Jean Medina declined comment.
An alliance, in which the companies would work together inmany ways but not merge their operations, would provide a way for themto raise more revenue without the integration problems that come withformal consolidation. It could set pricing and schedules and have U.S.antitrust immunity.
Mergers also can be highly disruptive, costly and risky for airlines. US Airways is still operating basically as two airlinesmore than two years after combining with America West because of disagreements between unions.
Continental is also still in discussions about an alliance with AMR's American Airlines and British Airways, said an official withknowledge of those talks. That person also was not authorized todiscuss the matter and requested anonymity.
The official said it would not be unusual for Continental to be considering alternatives, but that the British Airways-Continental-American talks are progressing and don't appear injeopardy. British Airways publicly disclosed the talks April 30.
Bob Mann, an independent airline consultant based in Port Washington, N.Y., said he doesn't think an alliance between United andContinental is likely because it wouldn't go far enough to solve the carriers' cost and capacity issues.
"The United guys are very much heading in the direction of something that will really allow them to downsize the airline," hesaid. "We're talking about large capacity cuts. ... The alliancedoesn't get to the point where you can really do the capacity-cutting."
The airlines are under more competitive pressure in the wake of Delta Air Lines Inc.'s pending deal to acquire Northwest Airlines.
Combining United and US Airways would create a carrier rivaling the Delta-Northwest tandem for the title of world's largestairline.
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