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Continental Airlines to partner United Airlines and join Star Alliance

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Continental Airlines and United Airlines have signed a framework agreement to cooperate extensively, linking their networks and services worldwide. In addition, Continental plans to join United in the Star Alliance, one of the most comprehensive airline alliances in the world.

Continental's plan to partner with United and join the Star Alliance will provide substantial new opportunities for all of our customers, said Larry Kellner, chairman and CEO of Continental. In a network business, there is significant value gained from linking with larger networks to provide truly national coverage and expanded global reach, and exploring new ways to reduce costs and improve efficiencies. As we experience some of the most challenging conditions airlines have ever faced, we look forward to the benefits of a new relationship with United and the other Star Alliance members.

Over the past few weeks, teams from the two airlines explored how the two companies could achieve efficiencies and synergies that expand beyond the well-established benefits of codesharing. They focused on plans for significant cooperation on frequent flier programs, lounges, facility utilization, information technology and procurement.

The teams worked well together to identify opportunities to create a unique and competitive partnership extending well beyond a traditional codeshare agreement, said Glenn Tilton, chairman, president and CEO of United. On behalf of the Star Alliance, I am very pleased to invite Continental to join as a member. Continental will bring significant new assets to our global alliance, and our two companies will work together effectively with our partners to provide the best overall network in America and the world.

Through this new partnership, Continental and United plan to establish joint ventures allowing them to cooperate with each other and with other Star Alliance airlines in international regions and compete more effectively in an increasingly global air travel market.

Initially, Continental will request the U.S. Department of Transportation (DOT) to allow it to join United - along with Lufthansa, Air Canada and six other carriers - in their already established antitrust immunized alliance. This will enable Continental, United, Lufthansa, Air Canada and other immunized Star Alliance carriers to work closely together as other antitrust immunized alliances do, and to establish trans-Atlantic and other international joint ventures so they can deliver highly competitive flight schedules, fares and service.

The planned trans-Atlantic joint venture, in which Continental, United, Lufthansa and Air Canada will pool revenue, will permit the carriers to compete more effectively with the proposed joint venture involving certain SkyTeam members that was recently granted antitrust immunity. The trans-Atlantic joint venture will combine the strength of the carriers to create a more efficient and comprehensive trans-Atlantic network for the carriers' customers.

Joint ventures are also planned for the Latin America and Asia Pacific regions, involving Continental, United and other members of the Star Alliance. Both antitrust immunity and code-sharing are subject to receipt of approvals from applicable national authorities.

Domestic Codesharing and Frequent Flier/Lounge Reciprocity

Continentals and Uniteds route networks are highly complementary, with little overlap, so they add value to each other and to customers who are planning domestic and international itineraries.

In the United States domestic market, where antitrust immunity for solely domestic travel would not apply, the two airlines plan to begin broad code-sharing, which facilitates the creation of itineraries using both carriers, as well as frequent flier program, elite customer recognition and airport lounge reciprocity. These cooperative activities are subject to regulatory notice to applicable authorities and Continental exiting certain of its current alliance relationships. Under codesharing, customers will benefit from a coordinated process for reservations/ticketing, check-in, flight connections and baggage transfer.

Frequent flier reciprocity will allow members of Continentals OnePass program and Uniteds Mileage Plus program to earn miles in their accounts when flying on either partner airline and redeem awards on both carriers. Travel on either carrier will count toward elite customer recognition. Similarly, each carriers customers will have access to both Continentals Presidents Club network and Uniteds Red Carpet Club network of airport lounges.

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