Continental says no to merger

— -- Continental Airlines' cal directors on Sunday opted to stick with a go-it-alone strategy at least for now, rejecting merger overtures from United Airlines uaua to create an even larger carrier than the one that would result from the pending merger of Delta dal and Northwest nwa.

Continental CEO Larry Kellner, in a message to employees late Sunday afternoon, said the airline's board followed management's recommendation in rejecting a merger path.

Talk of consolidation has swept across the U.S. airline industry since Delta and Northwest went public with their merger talks in January. That pair announced a merger agreement on April 14.

Kellner made it clear in his comments that Continental's management believes that it is stronger as an independent company than it would be if it merged.

"We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths — which we believe would be placed at risk in a merger with another carrier in today's environment," Kellner said.

Continental's decision leaves United, the USA's No. 2 carrier and the most ardent advocate of airline mergers, with only one logical large merger target left to pursue: US Airways lcc. Antitrust concerns would likely rule out a merger between United and American amr, the two largest carriers.

Officials from United and US Airways have said nothing, but there have been multiple published reports in the last two weeks that United executives have been talking with counterparts at US Airways even as they continued negotiations with Continental officials.

United Airlines' parent, UAL, said on Sunday it would pursue all options to ensure a sustainable future.

"Ensuring you have the right partner is everything," UAL said in a statement. "We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders."

United and US Airways tried to merge twice before but were stymied by antitrust concerns and labor opposition.

Since then both carriers have been through Chapter 11 bankruptcy — US Airways twice — and changes in management. Though Continental is electing not to merge for now, Kellner left the door wide open for the formation of an alliance with a new partner or partners.

Currently Continental is a member of SkyTeam, the global alliance originally formed by Delta and Air France. It also has a domestic marketing alliance with Northwest. But a Delta-Northwest merger threatens Continental's continued involvement.