Continental Airlines announced yesterday (27 April) that it will not merge with another airline ” a surprising decision at a time when more consolidation was expected in the face of tough economic conditions for carriers.
Continental has been in talks with United Airlines for months, and a deal looked likely after Delta and Northwest announced their agreement to create the world”s biggest carrier.
But in a letter to employees, Continental chairman and CEO Larry Kellner said the Board of Directors unanimously supported management”s recommendation not to merge in the current industry environment.
”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.
”We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths - which we believe would be placed at risk in a merger with another carrier in today's environment.”
Continental recently announced a first quarter loss of $80m (”40m) ” but this was small compared to United”s equivalent of more than half a billion dollars.
Kellner admitted that these are tough times for all US carriers, with record high fuel prices and a weak dollar, and said Continental must continue to adjust its business model to ”successfully navigate through these difficult times”, adding that a change of airline alliance may be on the cards: ”We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term.”
A spokeswoman for the airline”s pilots union Alpa told ABTN it fully supported the decision: ”It”s always been our position that Continental prefers to operate as a successful stand-alone carrier.”
Alpa union divisions representing Continental and United fired a warning shot immediately following the Delta-Northwest deal with a joint statement saying: ”We have real concerns regarding any transaction involving our airlines, and we have repeatedly asked our respective companies to acknowledge and address those concerns prior to making any merger or consolidation announcement. We will not stand idly by while the CEOs and their executives attempt to merge our airlines without regards to the long-term feasibility of the final entity.”