Continental Scuttles Merger With United

Execs scared by low earnings, sinking shares
By Neal Colgrass,  Newser Staff
Posted Apr 27, 2008 5:39 PM CDT
The United Airlines maintenance facility at San Francisco International Airport in San Francisco is seen Wednesday, April 2, 2008.   (AP Photo/Paul Sakuma)
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(Newser) – Continental Airlines scuttled merger talks with United Airlines today and likely triggered other deals in the plunging industry. United's $357 million first-quarter losses and a plan to lay off 1,000 workers scared away Continental execs, the New York Times reports. Now United parent UAL will likely scramble to cut another deal before fuel prices force it into bankruptcy.

UAL will likely try a merger with US Airways, as Continental returns to talks of an alliance with British Airways and American Airlines. “Every U.S. carrier, including Continental, is under enormous pressure from record high fuel prices, a slowing U.S. economy and a weak dollar," Continental CEO Lawrence Kellner wrote in a letter to workers.