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S&P: UAL, Continental unchanged
Standard & Poor's said that reports today that link UAL Corp. (B/stable) and Continental Airlines Inc. (B/stable/B-3) in talks over a possible merger have resurfaced, intensifying speculation about airline industry consolidation.
However, any such combination would face several hurdles and S&P's ratings and outlooks on both entities are not affected at this time.
Should a transaction be announced, ratings of each airline would likely be placed on CreditWatch with either negative or developing implications, the agency noted.
UAL, parent of United Air Lines Inc. (B/stable), has previously expressed interest in participating in industry consolidation and has indicated also that it sees Continental as a good fit, according to S&P, which added that Continental's management has been cool to the idea and Northwest Airlines Corp. (rated D), which has a right to block such a combination under most circumstances, would likely act to prevent a merger.
That could change if Northwest itself enters into a merger with one of the large hub-and-spoke airlines - possibly with Delta Air Lines Inc., also rated D - in which case the blocking right is no longer effective, S&P added.
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