Continental Plots New Flightplan

Amidst the news of the much talked about Delta-Northwest Airlines merger, another US legacy carrier had quietly removed the shackles from its feet.

Continental Airlines paid $100 to purchase the “Golden Share” held by Northwest Airlines.

Ever since news of the Delta-Northwest tie-up made headlines, speculation had been rife that Continental would be a suitor in waiting for the ailing United Airlines, which also made headlines for reporting the biggest loss since emerging from Chapter 11 bankruptcy in 2006.

Image courtesy of Rick Schlamp

“The path to sustainable profitability requires us to fundamentally overhaul every facet of our business,” said CEO Glenn Tilton.

Quite why the airline didn’t do that more rigidly under bankruptcy protection is at best laughable and at worst, for employees at least, a major concern - since any merger would invariably involve a larger job cull at United, not Continental or another suitor.

While Delta and Northwest are busy sorting out labour issues, Continental may face an inherent quandary. Certainly, merging with United would present it with less headache and overlap in key hubs like New York, Chicago and Houston. Nor is Continental a party to US-Australian services despite the recent open skies agreement between the two nations.

On the fleet side, it has even less to worry about given that the only 2 models Continental doesn’t operate is the Airbus A320 family and the Boeing 747-400 family which United does.

Does Continental even need to merge?

It has already been prudent in purchasing new fuel efficient Boeing 787’s whereas United has been left behind the major 2005-7 order curve. United cannot even boast the key that is London Heathrow Airport either.

One thing is for sure, in order to survive, United needs Continental more than Continental needs United.

“We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term,” says CEO Larry Kellner.

Perhaps that’s why it is now looking out for itself and wanting in on a (rumoured) long awaited deal between American Airlines and British Airways?

2 comments April 28th, 2008