Though the US’s Continental Airlines has rejected the offer of a merger with United Airlines, it is now busy deliberating with the carrier about striking up an alliance. A source who is aware of the negotiations has said that the board of directors of United will be discussing all the options they have before them, but one may as well not expect a decision yet. As fuel costs head up and depreciate profits, the domestic airlines have of late been planning various tie-ups to find a way out.

 

Usually an alliance lets the concerned / involved parties enlarge their hold, but at the same time it also keeps at bay the labor and regulatory issues associated with mergers. The okaying of Continental to pursue an alliance comes just a week after it rejected the offer of a merger with United. Continental Airlines, however, has made it clear that it wants an alliance outside of the SkyTeam that also comprises of Delta and Northwest airlines.

 

The Continental Airlines has also underscored that it wants to explore all its options. Experts explain that the Continental is much sought after for alliance as it is an important carrier in the New York zone, holding about 25 per cent market share. This airline’s hub at its Houston headquarters is also being seen as its strong point as it provides access to Latin America.