Continental CEO: We want to remain independent

Airline in talks to merge with UAL Corp., reports say

By AVI KRAWITZ
December 14, 2006 06:50
2 minute read.
The Jerusalem Post

continental 248.88. (photo credit: Bloomberg)

Continental Airlines chief executive officer Lawrence Kellner, in Israel Wednesday, shrugged off reports that the company was interested in merging with another major American carrier saying he was satisfied with the airline's position in the market as it stands. "There has been a lot of consolidation activity recently but we prefer that Continental remain independent as we feel we are very well-positioned in the market at the moment," Kellner said at a Tel Aviv press conference, in response to a question from The Jerusalem Post regarding widespread reports that the company was in talks to merge with UAL Corp., the parent of United Airlines.

  • Haredim turning to Continental after El Al row "We are aware of the reports about a possible merger but we don't respond to market rumors," Kellner said. While declining to address the issue directly, Kellner said that while the company's short-term position did not warrant consolidation, the possibility may arise in the future. "If the industry landscape changes and we feel it is the right thing for our shareholders, employees, customers and communities, we may consider it," he said. If the rumored deal were to take place, a United-Continental merger would combine the second- and fourth-largest US airlines and eclipse AMR Corp.'s American Airlines as the world's largest carrier as measured by passenger traffic. UAL CEO Glenn Tilton has championed mergers since February 2005, and this year hired Goldman Sachs Group Inc. for advice on possible transactions. "We believe United's hiring of an M&A investment banker has generated discussions between United and several carriers, including Continental," investment house Prudential Equity Group said in a note to clients. "We doubt Continental wants a deal but might do one contingent on the Delta-US Airways deal being approved." The firm did note, however, that it thinks Continental would be a good fit with UAL as it adds a major NYC, Latin and European presence to the United system. The alleged talks come three months after US Airways Group Inc. made a hostile $8.67 billion merger bid for Delta Air Lines Inc., setting the stage for possible consolidation across the US airline industry. Meanwhile, Atlanta-based regional carrier AirTran Airways this week made a bid to acquire Midwest Air Group for approximately $290 million. While the Midwest board declined the offer saying it preferred to remain independent, AirTran said it intended to continue to pursue the deal. The pace of acquisitions is accelerating as airlines, especially in the US, as the the industry recovers from a drop in travel since the September 11, 2001, terror attacks. Major US carriers lost more than $40 billion from 2001 through 2005. Merger activity has also been rife in the global airline industry this year as Asia's second largest carrier Cathay Pacific Airways Ltd. bought Hong Kong Dragon Airlines Ltd. to expand into China and with low-cost carrier Ryanair Holdings Plc making a hostile bid for Irish rival Aer Lingus Plc. Alitalia SpA and the Air France-KLM Group have also been linked to merger talks. Bloomberg contributed to this report.


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