Continental, Delta Rumored Candidates

Rumors of an impending merger decision swirled around United Airlines' annual investor briefing Tuesday... but management kept quiet on whether the airline was looking at making a bid for a rival airline.

In the webcasted conference, Airline CEO Glenn Tilton (right) told investors United is keeping an eye on industry consolidation, and the airline believes its a good idea.

"We are going to be attentive to opportunities as they present themselves," Tilton said, according to the Pacific Business Journal.

Tilton added, in no uncertain terms, that he wasn't ready to announce a specific offer.... or even if one exists.

Analysts say United is looking closely at Continental Airlines... which they say has a route network that wouldn't conflict with many of United's current flights overseas.

United is the largest air carrier in the Asia-Pacific region. Continental has focused on the Micronesian market, with a hub in Guam. The Houston-based carrier also flies into Latin America, on routes not covered by United. The two carrier's domestic routes are also largely complimentary.

Investment companies "floated" the idea of a UA/CO merger to clients last week. Bear Stearns said such a merger could save $1.5 billion a year. Calyon Securities reiterated United's position that the domestic air travel market could stand some consolidation.

Others say United could be ripe for a merger... with Delta Air Lines, should US Airways Group's hostile takeover bid fail.

"It's clear that mergers are going to happen in this industry, so nobody should be surprised if this is true," said Alan Sbarra with aviation consulting firm Roach & Sbarra. "United has talked to both these airlines before, and you could make a pretty good argument that they'll be a pretty good fit with either of them."

"United is desperate to do a deal, even though they don't have to," added consultant Michael Boyd. "My gut (feeling) would be that it would be with Delta. I don't think Continental wants to do anything."

FMI: www.united.com