More merger talk in the air

Dan Grech Dec 13, 2006


SCOTT JAGOW: There’s an awful lot of talk about airlines merging. Even some bids. But so far, no deals. Today, there’s more talk and more bidding. AirTran made an offer for Midwest Air out of Milwaukee. Australia’s Quantas rejected a bid from two private equity firms. And the biggie: United and Continental are reportedly discussing a merger. They were motivated to talk when US Airways made a play for Delta. Whew. Our Dan Grech sorts things.

DAN GRECH: Airlines have lost $30 billion in recent years. David Field with Airline Business Magazine says that’s driven the industry’s merger craze.

DAVID FIELD: Merge a couple of airlines, takes a few airplanes out of service. You have fewer seats, prices go up. That’s the way you drive toward profitability.

But Field is skeptical of a Continental United marriage. While United’s an eager suitor . . .

FIELD: Continental has taken a different stance. Continental has said, we’d really rather remain independent, we really don’t like mergers, we’ve seen how destructive mergers have been on the airline industry, we really won’t do any mergers unless we have to.

Though Field says the deal’s a long shot, the companies could be a good fit.

United’s strong in Asia and the Western U.S. Continental has a profitable hub in Newark and routes in Europe and Latin America.

In New York, I’m Dan Grech for Marketplace.

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