With speculation flying about merger talks between United Airlines and Continental Airlines, at least one consumer group is warning of a bumpy landing.
The Business Travel Coalition responded with “great concern” Tuesday night to reports of United-Continental talks, saying merger acceleration among major carriers could result in “overwhelming competition problems.”
United talks with Continental have heated up after US Airways’ bid to buy Delta last month, according to reports Tuesday night by The New York Times and The Wall Street Journal, both citing unnamed sources.
Discussions are “far from complete,” but United chief executive Glenn Tilton and Continental CEO Larry Kellner have met to discuss a combination, The Times reported.
In addition, United has contacted Delta as an alternative merger candidate, according to The Journal.
Evergreen-based aviation consultant Mike Boyd said he doesn’t think a United-Continental merger would have a significant effect in Denver, where United has a major hub, “because there is no overlap in Denver.” But nationwide, he said, “mergers always end up with less employees.”
Any airline merging with United “would be foolish to walk away from this market,” said Metro Denver Economic Development Corp. executive vice president Tom Clark.
In comments earlier Tuesday, Tilton did not discuss any specific deal but reiterated his interest in participating in airline-industry consolidation.
Consolidation “is good and overdue for the industry,” Tilton said during the company’s Investor Day. “With respect to our company itself and our options, we clearly are not in a position today to comment on anything specifically, other than to say we are going to be attentive to opportunities as they present themselves.”
Responding to a question about a possible leveraged buyout, Tilton said, “There is a tremendous amount of liquidity and a tremendous amount of cash in the general marketplace today, looking to be put to good use.”
Stuart Klaskin, a partner at KKC Aviation Consulting in Miami, speculated that United could be acquired by another airline or broken up, with a possible spinoff of discount operation Ted.
“I get the sense the management largely looks at their time now at United as kind of a stewardship thing … in an interim period until it consolidates with someone else,” Klaskin said.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or kyamanouchi@denverpost.com.
