Continental calls off merger with United

There won’t be a merger between Continental Airlines and United Airlines. Continental’s CEO Larry Kellner ruled out the deal with United because the risks would outweigh the chances. Furthermore, Continental considers quitting the Skyteam alliance. According to Kellner, Continental has several advantages over other airlines and does not want to put them at risk.

United Airlines considers now to merge with Star Alliance partner US Airways. Being in the same alliance, merging would be easier because both airlines already cooperate within Star Alliance.

Merging turns out to be the strategy with wich airlines want to face rising fuel prices. The severe increase in costs in addition to a weaker economy puts a lot of pressure on the airlines which also suffer from huge losses.

This development could push American Airlines, the current world’s largest airline, to rank 3, behind Northwest-Delta and United-US.

Though European airlines generally do better than American airlines in terms of profit at the moment, there have been some mergers in Europe, too. France’s Air France is now together with Dutch KLM Europe’s largest airline and German Air Berlin has taken over several smaller low-cost competitors and has expanded its operations from Europe-based low-cost air travel to international destinations in the Americas and in Asia.

http://www.nydailynews.com/money/2008/04/29/2008-04-29_united_switches_to_us_airways_as_contine.html

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