Continental CFO: Merger With UAL A Good Thing

Continental Chief Financial Officer Jeff Misner said that a merger with United Airlines would make a great combination - yet he also said that Continental prefers to stay independent, and a spokesperson from United said it hasn't made any deal for Continental - yet.

The CFO also said that if United would offer enough money, they would most likely go for it. And I bet that United just might do so, for the following reasons:

1. Little route overlap. United has hubs at LAX, SFO, DEN, ORD, and IAD; Continental's main hubs are at IAH, CLE, and EWR. The only hubs there that overlap are ORD/CLE and IAD/EWR. United is strong on the West Coast doesn't have a shabby Midwest network; Continental has a strong East Coast setup. And don't forget the international network: United is dominant in Asia and has coveted landing slots at London Heathrow and a pretty extensive European network; Continental has a strong Latin American and European network.
2. OK fleet commonality. United has primarily the A319/A320 for short haul, the 757 for medium haul, and the 747, 767 and 777 for long haul. Meanwhile, Continental has the 737 family for short haul (as does UAL, but it will get rid of its fleet of 737s over time), the 757 for medium haul, and the 767 and 777 for long haul.

I see a pretty good chance that they'll merge. After all, mergers are the 'in' thing to do in the US airline industry. Look at US Airways - bleeding money for the past few years. Everyone thought that they were dead, stick a fork in them, finito. But now they've merged with America West and might be marginally profitable. (Or if they're not, they're certainly not losing anywhere as much money as they were earlier.) So I could see the following matchups:

• US Airways + America West (already happened)
• United + Continental
• Delta + Northwest (this has been speculated upon quite a bit)

And if they do merge, which alliance would they join? My guess is United's Star Alliance, which the new US Airways is part of - after all, Continental is currently in SkyTeam, along with Delta and Northwest. If the latter two were to merge, they probably wouldn't take a UA+CO combination in. Plus United is one of Star's founding members and one of its biggest - if not the biggest - so I bet they'd join Star.