Continental Airlines on Sunday said it would hold firm to a standalone plan after its board of directors agreed with management's recommendation to "not merge with another airline at this time."
The announcement followed weeks of speculation, emboldened by the Delta-Northwest merger agreement, that Continental and United Airlines had accelerated discussions to launch into a deal of their own.
In a memo to employees, Continental CEO Larry Kellner and president Jeff Smisek said, "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 standalone basis."
Though Continental and United never publicly confirmed merger discussions, Continental during its first quarter earnings call this month helped to stoke consolidation fires when it said it had reclaimed its "golden share" from Northwest Airlines, which would Continental to enter into its own merger agreement (BTNonline, April 17)
United Airlines CEO Glenn Tilton, a long-time proponent of industry consolidation, in a statement following Continental's announcement said, "Our strategy is consistent. Consolidation is underway-ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers."