Wed, Apr 16, 2008
Analysts Say United, Continental May Join Forces Soon
The aviation world is still sizing up the merger of Delta and
Northwest... and analyst predictions that pairing will set off a
wave of airline merger-mania are about to be tested.
The Minneapolis Star-Tribune observes a combined Delta and
Northwest will have the size and reach that almost guarantees
competitors will respond. American Airlines, which suddenly finds
itself the number-two airline, has been mentioned as a merger
candidate, as have United and Continental.
So, will regulators allow the current six domestic network
carriers to consolidate to three in the next year? Chances may be
better than at any time in the past. Merger proponents note a
perfect storm of growing international competition as foreign
airlines deregulate and benefit from open skies agreements, soaring
fuel costs, growing market share for low-cost carriers, and the
dramatic spate of bankruptcies in the last two weeks.
Two things seem certain -- the Bush Justice Department won't be
able to take life easy during its last year, and those ubiquitous
"unnamed sources close to the talks" won't be out of work anytime
soon.
United Airlines CEO Glenn Tilton has been a long-time advocate
of industry consolidation, calling it "...but one of the changes
necessary to achieve sustained profitability... we will take the
actions we need to strengthen our global competitiveness..."
For his part, Tilton says UAL will entertain a merger, "when and
if it is the right choice." While that sounds like a carefully
measured response, the Chicago Tribune reports Tilton's message to
workers Tuesday morning is already being interpreted within the
industry as setting the stage for a possible United-Continental
merger.
Tilton promised his employees that executives will, "stay
focused on our customers and if there is news to report we will
bring it to you directly."
Place yer bets...
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