Continental Airlines is close to winning preliminary approval from US regulators to co-operate with United Airlines and its global allies on transcontinental ventures.
The airlines sought immunity last summer from US antitrust rules that would have limited Continental’s ability to co-ordinate schedules and share revenue with its new partners in the Star Alliance, which includes United, Lufthansa and Air Canada.
US transport officials plan to issue a show-cause order as early as this week on the carriers’ immunity application, clearing the way for final approval by the end of May, people familiar with the matter said.
Continental’s path to inclusion in the Star Alliance’s immunised venture began last summer, when the Houston-based carrier rejected United’s offer to merge and opted to leave SkyTeam, the alliance anchored by Delta Air Lines and Air France-KLM. Delta acquired another SkyTeam member, Northwest Airlines, last year.
Stymied by rules forbidding tie-ups between US carriers and their foreign counterparts, many of world’s largest airlines forged alliances to help share revenue and costs, and extend their reach around the globe. As those alliances evolved, airlines sought immunity from US antitrust rules to seek greater co-ordination.
As United and Continental form closer ties through their transcontinental venture, the two carriers may revisit merger discussions that were abandoned amid concerns that acquisition costs would overwhelm balance sheets weakened by fuel prices, people familiar with their plans said.
Members of a third big alliance, including British Airways and American Airlines, are also seeking immunity for their proposed venture. The carriers submitted additional paperwork to regulators last month and now await word on whether officials will deem their application complete.
While industry executives never doubted Continental would win approval to join Star’s immunised venture, airline alliances have nonetheless come under scrutiny in Washington recently.
Jim Oberstar, chairman of the House transportation and infrastructure committee, proposed a bill this year that called for tougher standards on alliances that were granted antitrust immunity. Last month, the Minnesota Democrat added language to a key measure that will set funding for the Federal Aviation Administration.
Under Mr Oberstar’s provision, carriers could lose their immunity if they did not convince transport officials to approve their plans within three years.
In unveiling their order granting preliminary approval next week, when Congress is on recess, regulators may hope to minimise any backlash.
Continental declined to comment, as did US transport officials.
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