ATW Daily News

Continental, United reach extensive cooperation pact; CO to join Star

Friday June 20, 2008

Continental Airlines and United Airlines yesterday signed a "framework agreement to cooperate extensively, linking their networks and services worldwide," and CO revealed that it will leave SkyTeam to join Star Alliance with UA and CO planning to form joint venture operations with other Star carriers for transatlantic services as well as flights to Latin America and Asia.

Both airlines recently said they would not enter into any merger agreements and both will remain independent and retain their brands (ATWOnline, June 2). But the pact goes "well beyond a traditional codeshare agreement," UA Chairman, President and CEO Glenn Tilton said. It will include "significant cooperation" on frequent-flier programs, airport lounges, facility utilization, information technology and procurement, the carriers said.

The deal stems from "efficiency opportunities identified and relationships developed during the parties' earlier merger discussions," the airlines said. Domestically, CO and UA plan "a coordinated process for reservations/ticketing, check-in, flight connections and baggage transfer."

CO said it will ask the US Dept. of Transportation to allow it to join UA, Lufthansa, Air Canada and six other Star carriers in an already-established antitrust-immunized alliance. "This will enable Continental. . .to establish transatlantic and other international joint ventures" with Star members that will include pooled revenue, it said. Joint ventures also are planned for Latin America and Asia.

CO has been considering leaving SkyTeam since Delta Air Lines and Northwest Airlines announced a merger agreement. It explored partnering with oneworld's British Airways and American Airlines (ATWOnline, May 2). "In a network business, there is significant value gained from linking with larger networks to provide truly national coverage and expanded global reach," CO Chairman and CEO Larry Kellner said. He and Tilton met in Chicago yesterday to sign a framework accord outlining a "systemwide alliance and cooperation principles," the carriers said.

Both antitrust immunity and codesharing agreements are subject to approval by applicable US and foreign government agencies. "Continental intends to terminate its existing agreements with SkyTeam members. . . although Continental may not be successful," CO cautioned.

UA and DL attempted to form a similar extensive cooperation agreement in 1998 but the deal died in the face of strong opposition by the Air Line Pilots Assn. They formed a more limited marketing partnership that ended in 2003.

by Aaron Karp

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