Continental Airlines and Western Airlines announced yesterday that they would try again to get Civil Aeronautics Board approval to merge.

The CAB turned down their previously proposed merger in July 1979 on grounds that a merger between two airlines serving so many of the same cities would have lessened competition. But Continental and Western officials yesterday expressed the belief that the board might be more receptive to a consolidation now. "Deregulation is a success, the free market is working, and our proposal is simply a rational and businesslike response to the environment in which we are now operating," A.L. Feldman, Continental's president and chief executive officer, and Dominic P. Renda, Western's president and chief executive officer, said in a joint statement.

Besides the CAB's approval, the merger requires the approvals of the boards of directors and stockholders of each company as well as the president of the United States, since the merger would involve some international routes.

The merger plan announced yesterday for creation of a new company to be called Western & Continental Corp., which would have as its principal division an operating airline with a yet undetermined name. Consolidation of the two airlines into the new corporation would be accomplished by the exchange of one share of common stock of Western for one share of stock of the new firm, and one share of the stock of Continental for 1.165 shares of the new company.

Continental and Western are two of the smaller "major" airlines and have similar characteristics: Both have headquarters in Los Angeles, operate mainly in the West with similar aircraft, and both have been reasonably profitable until the recent rise in fuel costs and the recession affected airline performance generally.

Both airlines, as most others, reported losses for the first half of 1980. Continental lost $11.5 million in the first half, compared with earnings of $7.1 million in 1979. Western reported a net loss of $14.2 million in the January-June period, compared with earnings of $27.2 million in 1979.

Feldman and Renda said yesterday a merger would enhance their ability to compete in the increasingly deregulated airline industry. "It will stem the losses which are eroding the capital bases of the two companies," they said.

A Continental-Western combination would create an airline that would rank the seventh largest in terms of passenger revenues, total operating revenues, and passenger miles, flown. Western, with 10,550 employes, serves 37 cities using 74 planes. Continental now, with 11,500 employes, serves 55 cities with 65 aircraft.

Under the merger plan announced yesterday, Renda would become chairman of the board and chariman of the executive committee of the new corporation while Feldman would become its president and chief executive officer.

Robert F. Six, currently Continental's board chairman, would become chairman of the board emeritus and chairman of the nominating committee. Arthur F. Kelly, currently Western's board chairman, would become chairman of the corporation and chairman of the planning committee.