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A rumored merger between Continental Airlines Inc. and United Air Lines Inc. was permanently grounded this weekend, after Continental's board decided that the airline was better off flying solo.
A letter from Larry Kellner, chairman and CEO, and Jeff Smisek, president, released Sunday read:
We want you to know that 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...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. However on the portion of the Continential Web site devoted to keeping employees up to date on any merger news was also updated on Sunday. While it affirmed the board's view that it preferred to stay independent, it still left the door open to a deal saying: We've said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. Media reports had UAL Corp., the parent of United Air Lines, in talks with Continental regarding a tie-up in response to the merger of Delta Air Lines Inc. and Northwest Airlines Corp. as well as soaring fuel costs. The statement may leave Continental without a partner at the airline industry's consolidation dance as UAL is also in discussions with US Airways Group Inc. about a possible merger, according to a Wall Street Journal report. - George White See Continential letter See Wall Street Journal story See airline consolidation DealWatch Categories Deal Video
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