Continental Airlines said Sunday that it had abandoned merger talks with United Airlines and was planning to remain an independent carrier, a blow to lengthy efforts by United to find a merger partner.
...
Continental decided to drop the discussions after UAL announced worse-than-expected earnings, which sent shares falling last week. On Tuesday, United said it lost $537 million during the first quarter, on sharply higher costs for jet fuel. The airline, which spent more than three years under bankruptcy protection earlier this decade, said it would cut flights and eliminate a further 1,000 jobs.
Directors at Continental, who met Sunday afternoon, feared that a merger with United could put their company in peril.
...
With the United-Continental deal scrapped, a new set of pairings is likely to take place. UAL is expected to push to reach a deal with US Airways, with which it had also been discussing a merger, people involved in the talks said.
...
Meanwhile, Continental is expected to press ahead with preliminary talks to create a three-way alliance — short of a full merger — with American Airlines and British Airways.
...
Meanwhile, Continental’s next steps are far from clear. Although it planned to pursue discussions with American about joining its alliance with British Airways, the corporate cultures of Continental and American differ significantly. American, as the nation’s biggest airline until the Delta-Northwest deal is completed, is likely to want to dictate the terms under which the much-smaller Continental comes on board.
...
