Houston-Based Airline To Join Star Alliance
When it comes to uneasy alliances, this one might rank right up
there with the United States and the Soviet Union during World War
II... and may be for a similar end, that being sheer survival.
Continental Airlines and United Airlines announced Thursday a
framework agreement to cooperate "extensively," linking their
networks and services worldwide to the benefit of customers, and
creating revenue opportunities and cost savings and other
In addition, Continental plans to join United in Star Alliance
-- the largest global airline alliance by far -- ending its
membership with the Delta/Northwest-headlined SkyTeam.
The agreement isn't a full-fledged merger; Continental soundly rejected that
idea in April. As ANN reported, United then
entered into 11th-hour talks with US Airways... only to turn down
that airline's overtures.
What the agreement does, however, is provide both carriers with
many of the same benefits as a merger... while keeping both
airlines independent for the immediate future, and avoiding nasty
"Alliances can work better than mergers in raising revenues and
reducing costs without the integration, regulatory and labor
headaches," Standards & Poor's analyst Jim Corridore told
Bloomberg. Corridore has rated United as "buy," with Continental
earning a "strong buy" recommendation.
News of the agreement will come as a surprise to those who'd bet
on a similar partnership between Continental and American Airlines.
As ANN reported, many believed those airlines
would form a similar partnership, after Continental turned down
United's merger overtures, as the alliance announced Thursday.
An alliance with American would have brought Continental into the
OneWorld alliance, along with British Airways... but little came of
those talks in the end.
Both airlines stress Thursday's announcement means more than
just a common alliance, however. Teams from Continental and United
worked over the last several weeks exploring solutions for how the
two companies could achieve results expanding beyond the benefits
of codesharing. Their work focused on plans for significant
cooperation on frequent flier programs, lounges, facility
utilization, information technology and procurement. This work was
assisted by the efficiency opportunities identified and
relationships developed during the parties' earlier merger
"The teams worked well together to identify opportunities to
create a unique and competitive partnership extending well beyond a
traditional code share agreement," said Glenn Tilton, chairman,
president and CEO of United. "On behalf of the Star Alliance, I am
very pleased to invite Continental to join as a member. Continental
will bring significant new assets to our global alliance, and our
two companies will work together effectively with our partners to
provide the best overall network in America and the world."
Kellner and Tilton signed a framework agreement Thursday
afternoon, outlining the systemwide alliance and cooperation
principles between their respective carriers.