Top > Business > 2006 > December > 2006-12-19

Continental Airlines and United Airlines Talking of Merger

The New York Times and the Wall Street Journal reported Tuesday that United Airlines, who just got out of bankruptcy in February, is holding preliminary talks with Continental Airlines regarding a possible merger between the two. The sources interviewed by the papers said that Larry Kellner, Chief Executive of Continental Airlines and Glenn F. Tilton, Chief Executive of United Airlines met to discuss a possible merger between the companies.

If the deal will in fact take place it will create one of the world`s top 10 largest airlines. Each company now has $4 billion market share. Tilton recently said that he was in favor of the airline industry`s recent trend towards consolidations. "Everyone talks to everyone all the time, but (United and Continental) renewed contact after the USAir and Delta situation emerged," said one anonymous source. "It`s far from certain. At the moment, it`s just talks."

The sources told the papers that the discussions have lately caught momentum, after US Airways` hostile bid for Delta Airlines last month. US Airways is the United States` third largest airline and is currently in bankruptcy for $8.67 billion. Delta refused the bid saying it is en route to leave bankruptcy on its own by next year. The Wall Street Journal reported that United Airlines approached Delta lately also regarding a possible merger. "The biggest hurdle is the antitrust and golden share issues. Those are the focus of any discussions," said another anonymous source. "You need to resolve those points -- and face some union contract issues -- before you can even get to issues like price, leadership and timing."