Carl Spackler

I was thinking the same thing. NWA and CAL would be a good match in my opinion. DAL/NWA may be so big that the justice dept. might force divestitures of some sort. NWA/CAL would still be smaller than AMR. The route structures of NWA/CAL don't overlap, and they are two well run companies with good cash balances.

I would hope that Larry is calling Doug at the very least, or vice versa.

Carl

captjns

Good sound decision made by the higher ups at CAL.

Come on! A healthy CAL merging with an ailing UAL??? You might as well send a healthy man into a room with malaria infected mosquitoes.

ewrbasedpilot

You've got to be kidding right? Hmmmm, let's see. We're losing money, so if we get bigger, we can lose MORE $$$. That makes sense!!! BTW, who do you fly for that you're so happy about mergers?

StraightShooter

I'm glad that Continental will be a stand alone carrier. Good for them. And good for the industry.

Continental, Southwest & JetBlue are the three carriers in America that strive to treat employee's like customers. I hope their corporate cultures aren't diluted by the dismal cultures of United/Delta/Northwest.

UAL/DAL/NWA (especially NWA) have a bunch of ****ed off employee's who give passengers a sorry experience of flying on their airline.

Continental seems to have a greater synergy about themselves that United surely does not have.

SoCalGuy

Fatty,

Think this will answer your question.......

April 28, 2008

By ANDREW ROSS SORKIN and MICHELINE MAYNARD

Continental Airlines said Sunday that it had abandoned merger talks with United Airlines and was planning to remain an independent carrier, a blow to lengthy efforts by United to find a merger partner.

Continental’s decision, announced by the airline Sunday afternoon, will change the complex game of musical chairs that the airline industry is playing after the merger announcement last week by Delta Air Lines and Northwest Airlines.

Continental’s move was a stunning development for United’s parent, UAL, which had been negotiating in expectation of reaching a deal by late this week. As recently as Friday, it looked as though Continental, based in Houston, and United, based outside Chicago, were on the way to reaching a merger agreement.

Continental decided to drop the talks after UAL announced worse-than-expected earnings, sending shares falling last week. On Tuesday, United said it lost $357 million in the first quarter, on higher costs for jet fuel. The airline, which spent more than three years under bankruptcy protection earlier this decade, said it would cut flights and eliminate a further 1,000 jobs.

Directors at Continental, who met Sunday afternoon, feared that a merger with United could put their company in peril. Continental, which had been expected to take management responsibilities in a deal with United, survived two bankruptcy filings of its own in the 1980s and 1990s, and has been considered one of the industry’s best-run carriers.

With the United-Continental deal scrapped, a new set of pairings is likely to take place. UAL is expected to push aggressively to reach a deal with US Airways, with which it had also been discussing a merger, people involved in the talks said. UAL had no immediate comment.

Meanwhile, Continental is expected to press ahead with preliminary talks to create a three-way alliance — short of a full merger — with American Airlines and British Airways.

In a letter to Continental employees, Lawrence W. Kellner, the airline’s chief executive, and Jeffery A. Smisek, its president, wrote: “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.”

They said they worried a deal would put company’s operational and financial strengths “at risk.” They also hinted at forming a new alliance, saying, “We are considering alternatives to SkyTeam” — an alliance with Delta and Northwest — “as we carefully evaluate which major global alliance will be best for Continental over the long term.”

The executives did not mention American or British Airways.

The two sides had agreed on several issues in their talks. Mr. Kellner would have run the combined company, while United’s chief executive, Glenn F. Tilton, would have stepped away from day-to-day operations.

Mr. Tilton had advocated strongly for industry consolidation, saying it was the only solution to help the struggling airlines become consistently profitable. US Airways’ chief executive, W. Douglas Parker, has also pushed for consolidation, making an unsuccessful hostile bid last year for Delta before it emerged from bankruptcy protection.

Mr. Kellner, in his letter, at least seemed sympathetic to the industry’s plight, telling employees, “Every U.S. carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing U.S. economy and a weak dollar.”

United’s stock closed at $21.43 on Monday. That evening, Delta and Northwest announced their merger plans. On Tuesday, United’s shares closed below $14. They ended the week at $15.21, off 29 percent for the week.

On Tuesday, United’s chief financial officer, Frederic F. Brace, said repeatedly that the airline was in compliance with the covenants of its bank agreements. But, Mr. Brace added, “With the recent spike in fuel prices and the softening economy the trajectory of our covenant coverage is downward.”

Because of steps the airline was taking to cut costs, he said, “it’s really very difficult to predict whether we will have an issue or not.”

On Wednesday, after the sharp drop in its stock, United issued a statement saying that it was in compliance with the terms of deals governing its credit arrangements with banks, including JPMorgan Chase, Citigroup and Credit Suisse.

Analysts said the situation created doubt about United’s health, an issue that has hovered around United since it emerged from bankruptcy protection in early 2006. That concern was a reason talks between Delta and United, which took place while Delta was under bankruptcy protection earlier this decade, never gained traction.

Meanwhile, Continental’s next steps are far from clear. Although it planned to pursue discussions with American about joining its alliance with British Airways, the corporate cultures of Continental and American differ significantly. American, as the nation’s biggest airline until the Delta-Northwest deal is completed, is likely to want to dictate the terms under which the much-smaller Continental comes on board.

At the same time, Continental’s membership in the SkyTeam alliance could offer much greater reach than a deal with American and British Airways. The new Delta will be bigger than American, and other members in SkyTeam include KLM and Air France, which have a broader base than American and British Airways across Europe and the rest of the world.

cfii2007

Co+swa..................

WarEagle28

There's an idea.. Southwest's domestic structure/CO international structure...make money...continue to expand internationally...It would be good for our life!

tsquare

SWA had better start thinknig aboutsomething... with the total dependence on a domestic market driven by an economy headed for recession... It ain't all good at LUV... IF it weren't for hedging, they would already be hurting... JMHO

tsquare

I'll let ya know how that works out next fall when I start flying Lagos..

ewrbasedpilot

Thanks for the nice words. I think almost every CAL employee gave a big sigh of relief when this merger was called off. Personally I think the employees will work a lot harder now that they know LK didn't want to sell us down the river. I know a lot of guys don't like management, but they seemed to have looked out for us on this one.