Continental Clears Way To Mergers
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Continental Airlines in its earnings statement today
said it redeemed its "golden share" from Northwest Airlines, enabling
Continental to enter into its own merger agreement.
 Since the late 1990s,
Northwest had held the preferred stock that precluded Continental from pursuing
certain "business combinations without Northwest's consent,"
Continental said. Northwest's merger agreement with Delta Air Lines earlier this
week allowed Continental to reclaim that share for $100. The industry
remains abuzz about the prospects of a merger between Continental and United
Airlines, and several analysts and travel buyers this week said they expect an
agreement within weeks.
Though neither Continental nor United have addressed the combination head-on,
Continental this week said it continues to explore "alternatives" to
its long-held stand-alone plan. Continental CEO Larry Kellner and president Jeff
Smisek in a memo this week said, "As we've said repeatedly for more than a
year and a half, our preference has been to remain independent as long as the
competitive landscape remained the same. However, the landscape is changing. We
will review our strategic alternatives and make sure we remain a strong
long-term competitor."
United CEO Glenn Tilton, a longtime proponent of industry consolidation, in a
memo this week used similar language to address the carrier's merger prospects.
"As the industry evolves, we will take the actions we need to strengthen
our global competitiveness, and we will participate in consolidation when and if
it is the right choice and provides the right benefits for employees, customers
and shareholders."
UBS analyst K. Crissey in a research note this week said, "We believe a
United/CAL merger could be announced in the next few weeks. We don't think the
pilots will be nearly as involved at the formative stages of such a deal and
expect fewer press leaks" than there were during negotiations between Delta
and Northwest.
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