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Continental dispels doubts
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August 24, 1998: 12:11 p.m. ET
Airline says alliance with Northwest remains intact despite labor problems
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NEW YORK (CNNfn) - Continental Airlines Inc. said Monday it remains committed to its alliance with Northwest Airlines Corp., despite a published report that Northwest's labor problems and a slow-moving regulatory approval process could jeopardize the deal.
In January, Northwest announced it had agreed to buy a controlling stake in Continental. The two airlines also entered a strategic alliance that would include code-sharing, which would allow the carriers to sell tickets on each other's flights, and a crossover of each other's frequent-flyer programs.
Northwest, however, faces a possible strike by pilots Saturday, as well as an imminent battle with machinists. The carrier's service has suffered during the labor dispute as planes have run consistently late, and a prolonged strike could cost the No. 4 airline hundreds of millions of dollars.
A report in Monday's Wall Street Journal said the airlines have canceled that deal until Northwest settles its labor problems and improves its service.
But Ned Walker, a Continental spokesman, said plans for the alliance remain intact.
"We are as committed as we were in January to that alliance," Walker said. "We feel we have a deal which we intend to honor, with a schedule that makes sense to both sides."
Walker said Continental has judged Northwest's labor problems "short-term in nature."
"Once the labor issues are resolved, we believe Northwest's service will return to their award-winning levels," he said.
The other issue that has hampered progress of the proposed alliance is the Justice Department's review of Continental's controlling stake in Northwest.
"In a normal process, the DOJ review would have been completed in May," Walker said. "They're taking an inordinate amount of time for a deal we think has no competitive concerns."
Walker said that while the companies have not set a timetable for beginning their alliance, Continental expects it to begin "sooner rather than later."
The Northwest-Continental deal set off a wave of air-carrier consolidation plans. American Airlines, a unit of AMR Corp. (AMR), said it would hook up with US Airways Group Inc.'s (U) US Airways; and UAL Corp.'s (UAL) United Air Lines, the No. 1 airline, said it would link with No. 3 Delta Air Lines Inc. (DAL) to form the biggest airline powerhouse.
Northwest (NWAC) shares slipped 3/8 to 28-7/8 in late-morning trading. Continental (CAI.B) shares fell 5/8 to 49-3/8. 
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