Continental (CAL) elects to go it alone

Posted Apr 27th 2008 8:24PM by Douglas McIntyre
Filed under: Deals, Consumer Experience, Competitive Strategy, Contl Airlines'B' (CAL), Oil, Delta Air Lines (DAL)

While Northwest (NYSE:NWA) and Delta (NYSE:DAL) have decided to merge, Continental (NYSE:CAL) will take the road in the other direction by electing to stay independent.

According to The Wall Street Journal "Continental's statement comes as the industry faces soaring fuel prices." The trouble is that whether airlines merge or not, crude oil prices continue to rise.

Continental has probably made a wise decision. There is no guarantee that the marriage of NWA and DAL will help either company. Mergers mean lay-offs and that often means strikes. If there are labor walk-outs the new carrier could face weeks of being unable to fly and unable to collect revenue. Merged reservation systems can also take months to integrate.

Continental will be on its own, but if fuel continues it sharp ascent, it won't matter.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: CAL, DAL, NWA

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Reader Comments (Page 1 of 1)

4-28-2008 @ 3:40PM

Micro1234 said...

Couldn't agree more. Since Continental is the most efficeint airline out there amongst the hub and spoke carriers it would be ridiculous for them to merge with a less efficient carrier. Not to mention all the bottlenecks that come with merging seniority scales between the companies and the combination of reservation systems. And the up side of not merging is that all the other mergers will lead to flight reductions by the merged carriers which allows Continental to boost their seats filled per flight and not have to reduce as much capacity. Other mergers will potentially make Continental even more efficient. Besides, one more merger for US Airways could be the last straw for whtever % of loyal customers they still have.