United eyes merger options, shrinks domestic network

United Airlines executives told analysts last week that they remain very interested in pursuing merger options as they continue to scale back the carrier’s domestic capacity during 2008 and expand its overseas flights. According to the Chicago Tribune, Some of the most significant reductions are coming at United’s Chicago O’Hare hub, where its schedule for the first quarter of 2008 showed five percent fewer flights than a year ago. Executives said United plans to shrink its domestic network by another 3.5 to 4.5 percent over the course of 2008, but they also expect to increase international flying by 5.5 percent for the year. The newspaper quoted United CEO Glenn Tilton as saying that any major U.S. carrier would be “far better prepared to compete” in a changing global environment if it consolidated with another airline, and he did not rule out the possibility of United leaving the global Star Alliance if its membership would pose a difficulty to a potential merger. There was growing speculation last week that United and Continental might be moving toward each other as reports circulated about Delta and Northwest beginning formal merger talks. In other efforts to improve its balance sheet, United is said to be looking at the possibility of selling off its Mileage Plus loyalty program to outside investors, and to shedding its big aircraft maintenance base at San Francisco International Airport.