This article from NYTimes.com has been sent to you by psa188@juno.com. /-------------------- advertisement -----------------------\ Enjoy new investment freedom! Get the tools you need to successfully manage your portfolio from Harrisdirect. Start with award-winning research. Then add access to round-the-clock customer service from Series-7 trained representatives. Open an account today and receive a $100 credit! http://www.nytimes.com/ads/Harrisdirect.html \----------------------------------------------------------/ Continental Holding Talks on a Link to US Airways May 24, 2002 By EDWARD WONG Gordon M. Bethune, chief executive of Continental Airlines, said yesterday that the carrier had been in "fruitful" talks with US Airways over a partnership that would allow the two airlines to link their routes. He also denied rumors that he was considering the chief executive's job at United Airlines, but stuck to the adage of never say never. "It could snow in July," he said. US Airways has been searching for what is called a code-sharing partner to help it extend its route structure beyond the East Coast, where its flights are concentrated. David N. Siegel, chief executive of US Airways, has said that finding a partner is a major part of a business plan that he wants to present to the federal government by June 15 to secure $1 billion in loan guarantees. In a code-sharing arrangement, airlines can sell tickets in which passengers fly one or more legs of the flight on a partner. The airlines split the revenue, and the passenger chooses which frequent-flier program will get the miles. Mr. Bethune said: "We've had a number of talks with US Airways, and they've been fruitful talks. I think it's an interesting proposition. "Dave and I are good friends," he added, alluding to the fact that Mr. Siegel once worked under him at Continental. "He knows as well as I do that kind of synergy would work for him." Continental is the country's fifth-largest airline, and US Airways is sixth largest. The two carriers overlap in markets like New York, and a partnership would let them consolidate their strengths, Mr. Bethune said. More important, they would complement each other with their routes, since Continental has a strong Midwest presence, with its flagship hub in Houston, and US Airways has a large market share along the East Coast. "I think it could be advantageous if US Airways' strategy is to get smaller," said Jim Corridore, an analyst at Standard & Poor's. "If they're going to try and get bigger, it's not in Continental's interest to work with them, because they would be in a lot of the same markets. Continental can use US Airways for a lot of the niche markets on the East Coast." US Airways declined to discuss details of its negotiations with Continental, saying only that it was in talks with all the major airlines except for Delta, whose routes and markets overlap many of its own. Northwest Airlines has a strong Midwest presence; United flies many West Coast and international routes. "We are talking to a number of the major carriers about an alliance relationship, both domestic and international," a spokesman for US Airways, David Castelveter, said. "Because of our strong franchise in the East, there's great interest in partnering with our company. We're right now working to determine who will be the best fit." US Airways lost $269 million in the first quarter, its seventh consecutive losing quarter. It lost nearly $2 billion last year. The Sept. 11 attacks crippled it more than most other airlines, because of the temporary closing of Ronald Reagan National Airport in Washington, where it has many flights, and because many business travelers on the East Coast have started traveling by train. Continental Airlines reported a first-quarter loss of $166 million, even though it had a $25 million pretax profit in March. It already has a code-share alliance with Northwest Airlines. Mr. Siegel, chief executive of US Airways, has been traveling to the airline's operations this week to talk to workers about his proposed plan. He wants to cut more than $1.2 billion in costs, with $950 million coming from labor. Employee costs totaled $3.73 billion last year. US Airways would be the seventh and largest carrier to apply for loan guarantees from the federal government. America West is the only applicant to be approved so far, getting $380 million in backing last December. A stringent restructuring plan could make US Airways more attractive to the program's administrators and potential partners like Continental. "Sometimes there are a lot of dates until you get married," Mr. Bethune said. As for the possibility that he might go to United, he said: "I just don't actually have an interest other than in what I do today." http://www.nytimes.com/2002/05/24/business/24AIR.html?ex=1023211337&ei=1&en=f7d31ccae69fccad HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company