Continental may join new alliance

DALLAS - Continental Airlines Inc. said yesterday it is considering new alliance partners and may pull out of the SkyTeam alliance of carriers around the world.

According to people familiar with the situation, Continental continued to discuss an alliance with UAL Corp.'s United Airlines that would be designed to boost revenues for each.

United and US Airways Group Inc. confirmed yesterday that they had suspended merger talks.

"Continental is continuing to review potential alliances and our membership in SkyTeam," said Continental spokeswoman Julie King in an e-mail. "We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term."

Houston-based Continental has also talked with British Airways and AMR Corp.'s American Airlines about joining them in an alliance. British Airways and American are part of another group of carriers called the oneworld alliance.

Alliances are pacts among airlines to work together to reduce costs and market themselves while continuing to fly their own planes using their own employees.

They can range from simply selling tickets on each other's flights to more complicated arrangements in which carriers work together on prices and schedules. They face less regulatory scrutiny and labor opposition than full mergers, such as Delta Air Lines Inc.'s April agreement to buy Northwest Airlines Corp.

United, the number two US airline, had tried to merge with Continental, but Continental walked away from the talks in April after UAL reported a $537 million loss in the first quarter.

Now United hopes to bring Continental into its Star Alliance.

Continental's partners in the SkyTeam alliance include Delta, Northwest, and Air France/KLM.