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"UAL in merger talks with Continental"
Wednesday, December 13, 2006
United, Continental in early merger talks: reports
NEW YORK (Reuters) - UAL Corp.'s United Airlines is in preliminary talks
with Continental Airlines about a possible merger, according to media
reports on Tuesday.
Any deal between the two carriers would likely be one of the largest in the
industry and create one of the world's top 10 airlines.
A month ago, US Airways Group Inc. made an $8.7 billion takeover bid for
rival Delta Air Lines Inc., raising expectations of consolidation in an
industry struggling with high fuel prices and competition from discount
Talks between Continental and United, which each have market value of about
$4 billion, picked up pace after US Airways made the offer last month, The
New York Times reported on its Web site, citing unnamed sources.
The two airlines have been in talks for several months, the Wall Street
Journal said in a report on its Web site, also citing unnamed sources.
A spokeswoman for United, the No. 2 U.S. carrier, said the airline does not
comment on rumor or speculation. Fourth-ranked Continental could not be
immediately reached for comment.
United also recently contacted Delta and its creditor committee about a
possible merger, the Journal said.
A Delta spokeswoman said she had no comment on the report.
The chief executive of United Airlines parent UAL Corp. on Tuesday
reiterated his view that the airline industry needs consolidation, but said
he was not ready to disclose United's likely role in any consolidation.
We think it is good and overdue for the industry despite the fact that it is
difficult," Glenn Tilton said on a Webcast of a UAL investors meeting
earlier on Tuesday.
"We are not in position to comment on anything specifically," Tilton said,
adding the airline is attentive to merger opportunities.
Tilton and Continental Chief Executive Larry Kellner have met to discuss the
possible merger, The Times said.
Continental has said recently that it too would consider a merger if it is
necessary to remain competitive.
But any merger involving Continental has an added complication. Bankrupt
Northwest Airlines holds a so-called "golden share" in the airline, giving
it the right to block mergers involving Continental.
Last week, Northwest asked a U.S. bankruptcy court for permission to hire
financial advisory firm Evercore Group to help it evaluate strategic
alternatives, including a merger.
AirTran Holdings Inc. is also preparing to make an offer for Midwest Air
Group Inc., the Journal reported on its Web site on Tuesday.
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