United reportedly hires investment bank amid merger speculation DAVE CARPENTER Associated Press CHICAGO - Speculation that United Airlines may be destined for an eventual merger with another U.S. carrier intensified Monday with its reported hiring of Goldman Sachs & Co. to explore strategic options. United, a unit of UAL Corp., has been advocating more industry consolidation for years under CEO Glenn Tilton and is in better position since leaving bankruptcy in February to take part in it. The report Monday by Crain's Chicago Business that United had hired an investment banker appeared to add credence to widespread industry talk that it could merge with a carrier such as Continental Airlines or Delta Air Lines. "It seems to show that United is serious about looking further into it - it's not just remarks by the CEO," said Standard and Poor's Corp. analyst Philip Baggaley. Most observers and airlines think industry consolidation is likely at some point, but it's been hard to predict when and with whom. Goldman is expected to help United assess the value of its domestic and international holdings, advise it on sales or purchases of domestic or international routes and scout for mergers, according to Crain's, citing unidentified people close to United. United declined comment. "We don't comment on rumors or speculation," spokeswoman Jean Medina said. Goldman Sachs spokeswoman Andrea Rachman said the New York investment bank also declined comment. Shares in UAL rose 63 cents, or 2.3 percent, to close at $28.45 on the Nasdaq Stock Market. Tilton has been increasingly signaling the possible involvement of United, the nation's second-largest carrier, in industry consolidation. He said in Chicago last week that the company is on solid footing to participate in the merger and acquisition market following three years of restructuring in bankruptcy, which ended in February. He has not speculated on which airlines might come into play, but has said repeatedly that United will consider opportunities that arise. "As we emerge from a difficult five years, it is time for us to begin to seize new opportunities," he said Monday in a speech to a transportation conference in Memphis. "United fully intends to expand our global reach to compete in the worlds fastest-growing markets." Continental Airlines Inc., parent of the fifth-largest U.S. carrier, has long been considered a good potential partner for United because of a complementary route network. Delta Air Lines Inc., currently restructuring in bankruptcy, has been speculated about for similar reasons. Either merger would create the largest U.S. airline. Michael Roach, consultant with the Roach and Sbarra airline consultancy, said US Airways Group Inc. could also make sense as a partner, even though United was rejected in its 2000 bid to acquire US Airways for $4.3 billion cash and $7.3 billion in debt. A pairing with AMR Corp.'s American Airlines, meanwhile, doesn't make sense because it likely would be scuttled by antitrust regulators as too big, he said. Likewise, Northwest Airlines Corp. would be a problem because United and Northwest control Pacific routes. Northwest also may be able to block any United-Continental pairing under a November 2000 agreement with Continental that gives it the right to block certain business combinations. Roach sees a deal of some kind as likely within the next 12 to 18 months, depending on airlines overcoming regulatory and other obstacles. "There's a lot of impetus for consolidation in the industry," he said. "But these deals are incredibly complicated, both to negotiate and to put together." The only merger in the past five years occurred last year with America West's acquisition of the bankrupt former US Airways. ON THE NET View our videos at: http://www.youtube.com/profile?user=ewrw4co Roger & Amanda La France