washingtonpost.com > Business > Local Business

Continental, United discussing merger again

By Tomoeh Murakami Tse
Washington Post Staff Writer
Friday, April 16, 2010

NEW YORK -- Continental Airlines and United Airlines are in discussions about a possible merger, according to two sources familiar with the matter.

The talks are in the early stages and could fall apart, said the sources, who spoke on the condition of anonymity because the negotiations are private.

The discussions follow reports last week that UAL, the parent company of United, had begun merger talks with US Airways.

Continental, with a strong presence in New York and Houston, is seen as a better fit for Chicago-based United, which also has hubs at Dulles International Airport and Denver, San Francisco and Los Angeles. Industry analysts said a combination of the two airlines could face fewer legal hurdles.

Analysts have speculated that United's talks with US Airways were really an attempt to get Continental to return to the negotiation table. United had discussed a merger with Continental in 2008, but Continental ultimately rebuffed the approach, deciding it would be better off on its own.

United and US Airways control much of the turf at two of the Washington region's airports, with US Airways the major carrier at Reagan National Airport. Because many of their routes overlap and they compete to keep prices low, a merger could lead to higher ticket prices for Washington area air travelers, analysts have said.

The Continental and United merger talks were first reported Thursday by the New York Times Web site.

© 2010 The Washington Post Company