Speculation Points to United-Continental Merger

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United Airlines is not commenting on published reports that it is considering merger discussions with Continental. Combined, the carriers would become the nation's biggest airline. Speculation about a possible merger drove stock in both companies up, and down, on Tuesday.


We start with a few business stories we're following this morning.

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United and Continental are not commenting on reports that the two airlines are in merger negotiations.

NPR's Jessica Smith has more.

JESSICA SMITH: Merger talks are going on among many airlines, and could lead to a consolidation wave not seen since the 1990s. David Field is U.S. editor for Airline Business Magazine.

Mr. DAVID FIELD (Editor, Airline Business Magazine): Basically, it's been a game of - not of musical chairs. It's been a game of who's going to dance with whom? The United Continental rumor - and I have to stress it's still a rumor - it's a little bit of a stretch in that Continental - of all the big U.S. airlines - doesn't want to merge, has the least reason to merge, has the most reason it want to stay independent. It makes money. It doesn't need to merge.

SMITH: Other analysts say industry consolidation is necessary to recoup losses since 9/11 and to compete with low-cost carriers. A United/Continental pair-up would still need shareholders and regulators approval. If the two were to combine, they would surpass American airlines and become the biggest carrier in the nation. Field says the move would likely not be good for consumers, as the number of flights and seats would fall and ticket prices would likely rise. Reports of United and Continental negotiating come four weeks after U.S. Airways made a hostile bid for Delta.

Jessica Smith, NPR News.

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