Continental Says No Merger on Horizon
Continental Airlines (CAL) - Get Report, the nation's No. 4 carrier by traffic, announced Sunday it has decided not to pursue a merger with another airline.
The announcement, in a letter to employees that was published in a
news release
, comes just a day after
said Continental had been in talks with No. 2 carrier United, a unit of
UAL
(UAUA)
, about a possible merger.
Continental recently had said it would consider its strategic options, after rivals
Delta Air Lines
(DAL) - Get Report
and
Northwest Airlines
(NWA)
announced plans to merge.
But in Sunday's letter, Continental said its board had supported management's recommendation that in the current industry environment, the airline's best choice is to go it alone. "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," the letter said.
Continental's decision means United will likely continue its reported merger talks with
US Airways
(LCC)
. United reportedly has been talking to US Airways for more than a month, but had started simultaneous negotiations with Continental.
Continental said it would review its membership in the SkyTeam alliance. "We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term," the letter said.
Times are tough for U.S. airlines, with skyrocketing fuel prices, a weak dollar and a slowing economy, and the letter acknowledged these challenges.
Continental shares closed Friday down 46 cents at $17.22. UAL stock lost 19 cents to close at $15.21. US Airways shares gained 10 cents to finish at $7.16.
This article was written by a staff member of TheStreet.com.








