Continental

[Amanda]

Nick told me tonight that the CAL MEC will recommend NOT merging with United. We were very worried about the possible merger and subsequent furlough so now we can rest a tiny bit easier.

[lucky81698]

It was actually Larry K. and CAL management that decided not to merge with anyone. Earlier today there were rumors that the UAL/CAL was a done deal. thank goodness they came to their senses! I was pretty worried too!

Jan

[Amanda]

Exactly Jan- thanks for setting me straight! Nick told me that but I just had a bad memory when I typed it up!

[lucky81698]

Don't you wish the MEC had that much power though! Imagine the contract!!!

[Rebes]

Did you hear this today? When Mike left on Saturday, he said there could be a merger announcement as early as this week....I hope there isn't...except at DC base would be nice!!!

[Amanda]

Here's the article:

April 28, 2008 // New York Times
> Continental Abandons Merger Talks With United
>
> 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 discussions after UAL announced
> worse-than-expected earnings, which sent shares falling last week.
> On Tuesday, United said it lost $537 million during the first
> quarter, on sharply 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 to reach a deal with
> US Airways, with which it had also been discussing a merger, people
> involved in the talks said. UAL could not be reached for 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, Citibank 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.
>
> Meanwhile, in a further sign of the industry's problems, Eos
> Airlines, a business-class carrier, said Sunday that it had filed
> bankrupcy protection and ceased flying. Eos said it filed for
> Chapter 11 protection in New York on Saturday. Eos offered business
> class flights between New York's JFK Airport and Stanstead Airport
> in London. It was the latest in a series of small airlines to file
> for bankruptcy protection in the last few weeks.
>
> Eos made its final flights from London to New York on Sunday, and
> canceled flights in the opposite direction. It began flying in 2005.
>

[Rebes]

Thanks for the article, that is a relief!!!

[amelia]

I heard on the national news tonight that CAL backed out of the merger with UAL. But they then said that UAL might look into a merger with US Airways.

This industry in the past few weeks has left my head spinning. so much going on, I can't keep up with it. Now SkyWest might try to buy out ExpressJet and everyone over on JC thinks it will happen....I didn't see that coming (DH had never told me rumers about it) There seems to be something new and big going on every other day. I'm starting to wonder whats next?

[Amanda]

Yeah- this industry keeps everyone on their toes...

[lucky81698]

SkyWest already put a hostile bid out for XJT last week, but it was refused. I wouldn't be surprised if Mesa went bankrupt this week, I think last week their stock was .49/share. I also saw a post that said if UAL merged with USAir, the UAL pilots would rather burn the place down than have that happen. I can't even imagine what a mess that would be given the state that USAir is in now since they just got rid of ALPA and the East/West pilots pretty much hate each other.