U.S. carriers Continental, United Airlines discuss merger: media

09:04, April 19, 2010      

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Two major U.S. carriers, Continental Airlines and United Airlines, are in merger talks, a move which could result in the world's largest airline, a source close to the talks said Thursday.

The talks between Houston-based Continental and Chicago-based United are in the very early stages, though much of the groundwork was laid in 2008, the source was quoted by U.S. media as saying.

The two carriers came very close to a merger in 2008, but their talks were suspended at the request of Continental's board, and Continental chose to pursue an alliance instead.

The United-Continental talks come after news reports said last week that United and Arizona-based US Airways are engaged in similar talks.

Those merger discussions are aimed at cutting costs and competing with the now merged Delta Air Lines Inc. and Northwest Airlines, sources said.

United's talks with both carriers are expected to progress rapidly, and a decision is expected within 30 days, a well-informed source was quoted by local media as saying.

All three carriers declined to comment.

Analysts believe the airlines have ample reasons to act swiftly and consider mergers to make them profitable.

The industry, which is struggling with high fuel prices and a pullback in consumer consumption due to a weak economy, has lost some 50 billion U.S. dollars in the past decade.

Observers believe Continental would be a better choice for United since their merger would form the world's largest airline, with relatively little overlap in their networks.

A Continental-United deal would also be easier to get through the labor unions, which can be a major force in getting a deal approved. United's pilot union on Thursday voiced support for a United-Continental merger.

A United-US Airways deal would create the world's second-largest airline.



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