Potential United-Continental Link Has Few Overlapping Regional Routes

While the Midwest (MEH)/AirTran (AAI) deal was being announced, United (UAUA) and Continental (CAL) announced preliminary merger talksprompted by the first volley in the merger wars launched by the USAirways (LCC)/Delta (DALRQ) takeover attempt. In a quick-and-dirty analysis by BACK Aviation Solutions of the United and Continental regional networks, only seven routes overlap including Cleveland (CLE)-Denver, CLE-Dulles (IAD), CLE-O'Hare (ORD), Denver- Houston, Newark-IAD and Houston-ORD. This could put Continental's Cleveland hub at risk. The two carriers also share Colgan and Chautauqua as partners.

The problem with this merger is Northwest's golden share, part of its alliance with the Houston-based carrier which may kibosh United's efforts. Meanwhile, Northwest announced it hired Evercore Partnersas its merger-and- acquisition advisor. While far from a done deal, analysts favor the UA/CO match which would combine United's Asian routes with Continental's Latin America and European markets as well as its strong Newark hub. United and Continental are the nation's second and fifth largest airlines, respectively.

For the moment, however, regionals must await announcement of any done deals and the resulting fallout as adjustments are made in their networks. Continental is said to have a request for proposal out for turboprop flying.

[Copyright 2006 Access Intelligence, LLC. All rights reserved.]