Continental Airlines worried about merging with United Airlines?
The U. S airlines in 24 months could compel other carriers to pursue tie ups or risk being left behind the second mega merger. The second and six largest U. S carriers by traffic based on domestic and international routes are not currently in talks said people familiar with the matter. Analysts say US Airways could bolster American’s East Coast clout and presence in Phoenix. Many already are profitable and enjoying fast growth, making it less likely that they would initiate deals. Hunter Keay, an airliner analyst at Stifle Nicolaus Capital Markets, said, “We don't believe the door will be closed on further consolidation involving US Airways”. As it took two full years for another major deal after Delta announced its merger with Northwest in April 2008, many in the industry caution that the next nig merger could be ways off.
Including New York, Los Angels and Dallas, while it won’t rule out an acquisition, American has said its comfortable with its already large footprints in key U. S markets. Other Continental employees talked about their anxiety, as follows, “We don't know enough about it” said one customer service agent while, the pilot who didn’t want to be identified said, “United is nothing but a mediocre airline, I don't think I want to be combined with that work force. Continental has better customer service, it has a better product.”
Wall Street analysts have questioned whether this will be enough for American, which has the industry’s highest labour costs and now it has reportedly has a bigger first quarter loss than its peers and many analysts expect it to stay in the red in 2010 even as other U. S carriers turn profitable. Tom Horton , America’s chief financial officer , recently told investors , said, “I think consolidation can only be good for the industry and only be good for us, whether we participate in it or not”.
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