Reports say Continental, United talking merger

The top executives at Continental Airlines, the fifth-busiest airline at Jacksonville International Airport, say the airline is considering "strategic alternatives" in the wake of a merger agreement between Northwest Airlines Corp. and Delta Air Lines Inc.

Those alternatives could include a potential merger with United Airlines, the eighth-busiest airline at JIA, according to reports. United's chief executive also issued a statement Tuesday indicating its willingness to participate in consolidation under the right circumstances.

Reuters reported late Monday that Houston-based Continental (NYSE: CAL) and Chicago-based United, whose parent is UAL Corp. (NASDAQ: UAUA), have laid most of the groundwork for a merger and sources close to the matter said a deal could happen "pretty quickly" following the Delta and Northwest announcement.

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Continental's pilots, represented by the Air Line Pilots Association International, began discussing the possible merger in January, Reuters reported.

Northwest Airlines and Delta Air Lines announced late Monday an agreement to merge in a $17.7 billion deal that would create the world's largest airline.

In a statement released Tuesday morning, Larry Kellner, Continental's chairman and CEO, and Jeff Smisek, the airline's president, said that while the airline prefers to remain independent, the change in the competitive landscape will mean that it will have to consider its options.

"We will review our strategic alternatives and make sure we remain a strong long-term competitor," Kellner and Smisek wrote.

In the statement issued by United, the airline's chairman, president and CEO Glenn Tilton said: "The industry has changed dramatically -- both globally and domestically -- and the old paradigms no longer apply; the current fuel and economic environment are only accelerating the need for a different approach. . . . As the industry evolves, we will take the actions we need to strengthen our global competitiveness, and we will participate in consolidation when and if it is the right choice and provides the right benefits for employees, customers and shareholders."