Sunday, April 27, 2008

Continental-United merger is a no-go!

Big news: Continental has broken off its merger talks with United Air Lines!

As CEO Larry Kellner and President Smisek notified Continental employees in a letter, “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.”

Translation? United parent company UAL posted larger-than-expected losses of $537 million on Tuesday, and if we tie up with them, we're going down with them.

For those who may have been hoping that a Continental-United merger would create a "best of both worlds" airline that delivered Continental service to a larger network, here's a consolation: United is apparently also in talks with U.S. Airways. If that comes to fruition, the resulting decline in service is likely to make the decision to fly Continental all the easier.

(Sorry for the bias. I am a United 1K, but I've never had any good experiences with U.S. Airways, and that airline hasn't even managed to fully complete its merger with America West that took place in 2005. I'm not optimistic about a UAL-U.S. Airways tie-up helping matters.)

No comments: