Continental CEO Says Company Would Consider Merger

The chief executive of Continental Airlines Inc. says the company would consider a merger to remain competitive if the industry continues to consolidate.

In a message to employees Friday, two days after US Airways Group Inc. made a hostile bid for bankrupt rival Delta Air Lines, Continental chief Larry Kellner told employees the airline wants to remain independent and continue to grow.

"However, if the landscape of the U.S. airline industry does indeed change, we'll do what we need to do to act in the best interests of you, our customers, our shareholders and the communities we serve," Kellner said in the message released by the airline, the nation's fourth-largest carrier.

Speculation that United Airlines parent UAL Corp. might make a play for Continental or Delta as a merger partner has intensified since US Airways' unsolicited bid last Wednesday. Analysts said the US Airways offer could touch off a long-expected round of consolidation among U.S. network carriers.

Kellner said in a speech in Mexico City last month that his company had no plans to merge with another carrier despite rampant speculation. The latest remarks, however, appeared to open the door to such a pairing, though he noted Friday, "There is no certainty that the proposed US Airways/Delta merger will ever occur."

"There are all sorts of hurdles, and we've seen offers before that did not end up happening," he said.

United, which has been an outspoken advocate of the need for industry consolidation, reportedly hired Goldman Sachs as its investment banker in recent months to pursue strategic options. Continental has long been considered a good potential partner for the Elk Grove Village, Ill.-based airline because of their complementary route networks.

Asked about a possible bid for Delta or Continental, United spokeswoman Jean Medina said Tuesday the company does not comment on rumors or speculation.

The latest speculation pushed both airlines' stocks sharply higher Tuesday. Continental shares rose $1.85, or 4.4 percent, to close at $44.38 on the New York Stock Exchange, while United shares jumped $2.09, or 5.2 percent, to $42.28 on Nasdaq.


AP Business Writer Dave Carpenter in Chicago contributed to this report.

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