Filed by Continental Airlines, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Continental Airlines, Inc.
Commission File No.: 1-10323
Information For Investors And Stockholders
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval. The
proposed merger of equals transaction between UAL Corporation (“UAL”) and
Continental Airlines, Inc. (“Continental”) will be submitted to the respective
stockholders of UAL and Continental for their consideration. UAL will
file with the Securities and Exchange Commission (“SEC”) a registration
statement on Form S-4 that will include a joint proxy statement of Continental
and UAL that also constitutes a prospectus of UAL. UAL and
Continental also plan to file other documents with the SEC regarding the
proposed transaction. INVESTORS AND SECURITY HOLDERS OF CONTINENTAL
ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT
DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and stockholders will be able to
obtain free copies of the joint proxy statement/prospectus and other documents
containing important information about UAL and Continental, once such documents
are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by UAL will be available free of
charge on UAL’s website at www.united.com under
the tab “Investor Relations” or by contacting UAL’s Investor Relations
Department at (312) 997-8610. Copies of the documents filed with the
SEC by Continental will be available free of charge on Continental’s website at
under the tab “About Continental” and then under the tab “Investor Relations” or
by contacting Continental’s Investor Relations Department at (713)
Continental and certain of their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from the
stockholders of Continental in connection with the proposed
transaction. Information about the directors and executive officers
of Continental is set forth in its proxy statement for its 2010 annual meeting
of stockholders, which was filed with the SEC on April 23,
2010. Information about the directors and executive officers of UAL
is set forth in its proxy statement for its 2010 annual meeting of stockholders,
which was filed with the SEC on April 30, 2010. These documents can
be obtained free of charge from the sources indicated above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become
Statement Regarding Forward-Looking Statements
communication contains “forward-looking statements” within the meaning of the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995
that are not limited to historical facts, but reflect Continental’s and UAL’s
current beliefs, expectations or intentions regarding future
events. Words such as “may,” “will,”
“could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,”
and similar expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Continental’s and UAL’s expectations with respect to the synergies,
costs and other anticipated financial impacts of the proposed transaction;
future financial and operating results of the combined company; the combined
company’s plans, objectives, expectations and intentions with respect to future
operations and services; approval of the proposed transaction by stockholders
and by governmental regulatory authorities; the satisfaction of the closing
conditions to the proposed transaction; and the timing of the completion of the
forward-looking statements involve significant risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements, many of which are generally outside the control of
Continental and UAL and are difficult to predict. Examples of such
risks and uncertainties include, but are not limited to, (1) the possibility
that the proposed transaction is delayed or does not close, including due to the
failure to receive required stockholder or regulatory approvals, the taking of
governmental action (including the passage of legislation) to block the
transaction, or the failure of other closing conditions, and (2) the possibility
that the expected synergies will not be realized, or will not be realized within
the expected time period, because of, among other things, significant volatility
in the cost of aircraft fuel, the high leverage and other significant capital
commitments of Continental and UAL, the ability to obtain financing and to
refinance the combined company’s debt, the ability of Continental and UAL to
maintain and utilize their respective net operating losses, the impact of labor
relations, global economic conditions, fluctuations in exchange rates,
competitive actions taken by other airlines, terrorist attacks, natural
disasters, difficulties in integrating the two airlines, the willingness of
customers to travel by air, actions taken or conditions imposed by the U.S. and
foreign governments or other regulatory matters, excessive taxation, further
industry consolidation and changes in airlines alliances, the availability and
cost of insurance and public health threats.
Continental caution that the foregoing list of factors is not exclusive.
Additional information concerning these and other risk factors is contained in
Continental’s and UAL’s most recently filed Annual Reports on Form 10-K,
subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K,
and other SEC filings. All subsequent written and oral
forward-looking statements concerning Continental, UAL, the proposed transaction
or other matters and attributable to Continental or UAL or any person acting on
their behalf are expressly qualified in their entirety by the cautionary
statements above. Neither Continental nor UAL undertakes any
obligation to publicly update any of these forward-looking statements to reflect
events or circumstances that may arise after the date hereof.
CONTINENTAL MERGER PRESS CONFERENCE
following is a transcript of a press conference held on May 3,
very much for coming. My partner, Jeff, and I are very, very proud
today to announce the merger of equals between our respective companies,
Continental and United, to create a very new and a very exciting United
Airlines. This company's built for sustained success and
profitability in what we all know to be a hyper-competitive
industry. We have an unparalleled network, a stronger company
employment and career platform and opportunity, and a better opportunity for our
communities to be connected globally by this extraordinary combination, and a
great opportunity for shareholders of both companies.
Glenn. As you can see from these aircraft, these logos, this banner,
this is a true merger of equals. We bring together the very best of
Continental with the very best of United. We've developed a great
working relationship, through our Star Alliance. We've learned a lot
from each other. We've learned to respect and admire each other's
management teams and co-workers. And the merger creates the leading
team in the industry, the leading airline in the industry.
And we're going to continue
to focus on what's important to the customer, clean, safe and reliable air
transportation. And working together ... and by that, I mean treating
each other as co-workers, and treating our customers with dignity and respect,
and having open, honest and direct communication.
This merger benefits all
our stakeholders. Our customers, we're providing an unparalleled
global network on a single carrier. Communities, the great air
service that we will provide will foster jobs and economic
growth. For our employees, this merger provides a stable foundation
in what is an unstable and fragile industry. This will provide our
employees with long-term careers, not just jobs. And for our
shareholders, the significant synergies that we will deliver and we are
confident that we can deliver them, will provide a good return to our
shareholders, in an industry that's been noted for failing to do
Moreover, we are
creating a better carrier combined than either of us could have ever created
alone. And that creates a better future for all of our
and United are doing this against the backdrop of an industry landscape that has
changed significantly. We are competed across the United States by
low-cost carriers who continue to grow. We now compete against the
new Delta, a combination of Delta and Northwest. And there's
international consolidation of note, significantly, in the Pacific, and of
course already in Europe.
Both of our companies have
improved since Jeff and I first had the opportunity to think about this
combination. We have more opportunity together, however, than either one of us,
as Jeff just said a moment ago, could realize independent of each
As he said, this company is
going to be able to serve our shareholders, our stakeholders, and our employees
in ways that, frankly, neither Continental nor United could do if we weren't
about to embark on this journey. But today, the companies are ready
for that journey. We are financially sound. We have much
improved balance sheets. And our cash positions are individually, and
now collectively, industry-leading.
We are operationally
sound. We have learned much from our partner in the course of our
two-year relationship. And now today, we're very proud to be able to
say that United Airlines is the number one on-time airline among the network
We have the ability to
withstand the volatility that Jeff just described a moment ago. Since
9/11 and I know before, but that was before my experience in the industry, this
industry has been battered by external challenges on a repeated
basis. You need the resilience that we just discussed to be able to
withstand that, to recover from it, and then to thrive.
United and Continental are the right partners at the right time. So
let's fly together (Overlap). Let's open it up for questions.
morning, Jeff. At this point, we do have a limited amount of time in
our question-and-answer session, and we do have a microphone to assist the news
media representatives in asking their question. And we would ask you
use the microphone if possible. If, when you announce your question,
you could please state your name, as well as the media organization you are
with, that would be very helpful. And please indicate to whom you are
addressing the question. With that, do we have any questions from the
news media? Yes, sir.
M: Yes. Edward
Tan(?), (Inaudible) News Wires. I actually have two questions. The
first one is directed to both gentlemen, and the second one to Mr.
Tilton. The first question is, could you indicate how many board
members for the new company will be coming from the Continental side, and how
many from the United side?
JS: Sure. Sure,
I'll answer that. This is a merger of equals, a true merger of
equals. So, Continental will contribute six directors to the combined
board. United will contribute six directors to the combined
board. And Glenn and I will be on the border. He will
serve as non-executive chairman. I will serve as
CEO. Glenn will stay in that role for two years, and then I'll become
the executive chairman. And then, of course, there are the two
representative labor unions that, under United's charter, are on the board of
it's a perfectly balance board.
then a question for Mr. Tilton, please, on the second one. This is,
ostensibly, financially, United Airlines acquiring Continental
Airlines. However, it appears that you've been persuaded to
relinquish the CEO position to Jeff. Could you comment on the
thoughts and some of the motivations that led to this decision?
been the CEO of United Airlines for eight years. They've been a very
rewarding and a very challenging eight years. Maybe I should put that
in reverse order. They've been very challenging and very
Jeff has been the chief
executive officer of Continental for one quarter. So, let Jeff
experience the challenges for a little
the left side of the room, in the rear.
there. Suzanne O'Halloran from Bloomberg Television. Jeff,
this would be a question for you. We have oil at $86 a barrel
today. When does oil become too high, or when may it cancel out the
cost synergies that you've been talking about with this deal?
recognize, when fuel changes in prices, as airlines, we adjust to
that. We adjust capacity. We adjust to the market
demand. But recognize, this airline, with the combined fleets, will
have the youngest fleet in the industry, and the most fuel efficient fleet in
the industry, when you adjust for the cabin mix. So we'll have, in
effect, the permanent hedge. The best hedge against high fuel prices
is a modern and fuel efficient fleet. And this combined airline will
have the most modern and fuel efficient fleet in the entire industry, among our
acknowledging that that's the best hedge ... and in fact, it certainly is ... we
also have a very competitive hedge book.
Okay. So, 86, you're not worried about that particular
at, any fuel price, there will always be airlines. Higher the fuel
price, the smaller the airlines will be. Lower the fuel price, the
larger the airlines will be, and fares follow that.
having been in that business for 32 years? Price is too
you. I agree. (Laughter).
there an additional question?
is this some kind of a revolt? (Laughter).
we do have one more question from ...
didn't mean to provoke you, so.
this is (Inaudible) with (Overlap/Inaudible).
how are you?
W: Hey. Good. Earlier
today, Jeff, you had said that you weren't ready to make any kind of decision
about mergers in January. Can
you tell me a little bit about what's changed in the past five
months? Has there been a rapid improvement, (Overlap/Inaudible)
me take you back to 2008, when Glenn's company and our company engaged in merger
discussions. At that time, we were on the precipice of the largest global
recession since the Great Depression. Fuel prices were skyrocketing
to unprecedented highs and continued to go up. Liquidity was
constrained in both carriers, and the capital markets were becoming distressed,
and certainly with respect to our ability to access within the capital
Now, fast-forward to
today. We've always had the perfect complementarity of roots, and the
perfect fit of these airlines. But the time then wasn't
right. So the risks then outweighed the rewards.
Now, fast-forward to today,
where we have a recovering economy. We have business travel
increasing. We have fuel, although high, it's
manageable. We have access not only to the capital markets, but we
ourselves have significant liquidity today. Well, that makes a lot of
So, I was there, just reading
my screen, and I saw them engage in discussions with another
partner. And I realized that the best partner for Continental, and
the best way to grow our combined airline, and provide the foundation of
stability for all of our constituencies, was to merge. And I saw him
going off to merge with someone else, and I felt I was the far prettier girl,
and so I gave him a call. And, it was ...
JS: Yeah. Happy
... any time. (Laughs). And so, the industrial logic to
this, the logic was absolutely compelling. It was just a question of
when the stars aligned. And there's no way to know if the stars ever
would have aligned again. And certainly, if he'd merged with the
other party, they possibly would never have aligned for us. So this
was the right partner at the right time, with the right results. And
so, we're very proud and pleased to be here together.
you have survived, had you guys not merged? I mean, is a merger
isn't a point of survival. It's, what you want to do with your future
for your stakeholders, for your co-workers, for your customers, for the
communities you serve. For your shareholders. We are
creating an airline here today that has a far brighter future than either of us
individually could have ever created on our own.
think it's really important to go back and examine the performance of our
respective companies here recently. Both of our companies are on a
very competitive trajectory. So, this is not a defensive combination
of companies. This is a combination of companies that creates future
opportunity. So, it creates future value for shareholders. It creates
future opportunity for employees. It creates the sustainability that
Jeff referred to, and it creates an enormous opportunity for customers that they
didn't previously have.
there a further question? On the right side of the room.
morning. Dan Arnall, with ABC News.
questions for you. The first thing. Several analysts have
told us today that after the merger is completed, consumers are likely going to
see prices potentially go up. Can you talk a little bit about, I
guess, the retail price of the services you guys provide, and what effect this
might have on that?
sure. Let me be clear that the synergies that we have projected for
the combined company have no airfare increases whatsoever in those
synergies. We do not set prices. We didn't set prices in
the market before this transaction. We won't set prices in the market
after this transaction. We respond to customer
demand. This is a brutally competitive industry. What
we're doing today is making ourselves more competitive on a global scale, as
this entire industry is globalized, than we could have done individually with
This is not a merger
predicated on increasing fares. This is a merger predicated on being
more competitive and more global, and providing an unparalleled network for
scope and scale, attractive to both business travelers, who are very high-yield
business travelers, and general consumers and leisure travels.
just draw your attention to two interesting questions, to sort of juxtapose the
questions. So over here, we had a question about $86 oil, and over
here, we had a question as to whether or not do you think you might be able to
raise fares. Eighty-six dollar oil? Fares have to be
responsive to $86 oil. What goes in has got to be compensated before
it comes out, right?
question. The root networks are obviously very complementary, but
obviously you'll get some efficiencies through some of the overlapping
administrative functions. Can you tell me a little bit about how many
folks to expect to be kind of in a redundancy, and where those jobs might be
we don't expect any significant loss in the front line jobs. Clearly,
in a merger, where you have overlapping general administrative expense, that's
part of the logic of a merger, and that will occur. You know, we're
not in a position to know precisely the number of jobs or where they'll be
located. In the corporate headquarters, current corporate
headquarters of Houston, there will be some job loss. In the
headquarters of United, there will be some job loss. To the other,
however, we will be more competitive.
And, you know, Glenn and I
will treat our employees as you always treat employees. You treat
them with dignity and respect. You provide appropriate
severance. And also, by bringing these carriers together and having
the ability to grow in the future in ways we never could have done before, we'll
hope to hire back many of those very same people.
So, the only thing that I would add to Jeff's good answer here is that he and I
are going to sit down and do something we really haven't had the opportunity to
do yet. We are going to co-chair an integration council, the two of
us. We are going to agree on what we think the optimal structure is,
for the management and the administration of the company. We don't
have that yet. And then we are going to populate that management
structure and that administrative structure with the very best employees,
representing a roughly equal number of participants from the two
companies. You bet.
we have another question? Yes, sir.
M: (Inaudible). Both
airlines had pending orders for new aircraft. United, for example,
had 25 firm orders with Boeing and with Airbus. Will those continue,
or will they be on hold, pending the resolution of your
me speak to that. This carrier has unparalleled opportunities for
growth, and for using those new aircraft in an optimal way. I would
anticipate that we will have many uses for the current orders on the United side
and on the Continental side.
And recognize what a huge
competitive advantage we'll have. We will be, together, the first
U.S. air carrier to receive the 787, which is a magnificent
airplane. The A-350 is a magnificent airplane. We will
have the most flexible fleet in the industry, the youngest fleet in the
industry, the most fuel-efficient fleet in the industry, and we will populate
with the best aircraft in the industry. So we're very excited about
the fleet that we have now, and that we'll have in the future.
as Jeff has reminded me on occasion, it's nice to have competition in what is
only really today a duopoly. So, we want to make sure that we keep some
competition there, huh?
have time for a couple of more questions, and I think we have one over on the
far side of the room.
Jane doesn't have any questions, because frankly, we could be asking
her. What's happening, Mary Jane?
GC: Hi. I'm
Genie Corderro(?) from Dow Jones. How do you plan on attracting, you
know, corporate customers? And, you know, how much does your, you
know, revenue projections depend on attracting corporate customers?
the network that we are building, with the complementarity of the network, the
power of Continental on the East Coast, in terms of attracting corporate
customers, the New York hub, our flows into Latin America, coupled with the huge
presence that United has on the West Coast and its vast Pacific network, we're
building a network that will be highly attractive to corporate customers, and I
believe quite sticky to corporate customers. That is, when they fly
us, not only will they stay with us, they'll like the service levels, they'll
like the quality. We'll be making the money it will take to invest in
our product and keep it competitive.
So we're highly
confident we will attract corporate customers, and we'll have the world's
leading loyalty program as well. So, I think we bring a lot to the
table to corporate customers. I think we're going to attract a lot of
corporate customers. And they're very important to us, because those
are high-yield customers. And more importantly, we'll be able to
retain those corporate customers.
only people happier today are Jeff and myself are our corporate sales
SH: Hi. Suzanne,
again, from Bloomberg Television. Could you just give us a sense,
both of you, on how the economy is coming back, where we are in the recovery
sure. I think our first quarter performance for both carriers
reflected the economy is very steadily, gradually improving. We are,
in many ways, a very accurate reflection of that. Even what regions
of the world provide us with recovery as the economy recovers.
From our perspective,
certainly ... and I can let Jeff speak to his own ... the Pacific was clearly
quite encouraging for us. And that's a franchise consideration for
the United side of this new company. And the Pacific has come back
quite nicely. I think the most significant thing that we saw was it
actually improved over two years ago, first quarter two years ago, rather than
simply the very depressed levels of a year ago. And that was really
for one final question. If no further questions, I want to thank Jeff
and Glenn for being here today ...
as well as our news media representatives.
done. Well done.
man. Appreciate it.
(END OF TAPE)