* Continental joins UAL in alliance
* Commercial agreements set with other members
* Says shifting alliances will add $100 mln a year
* Shares up 1.2 percent on NYSE
(Adds comments from Continental executives, meeting,
background, share move, byline)
By Deepa Seetharaman
NEW YORK, Oct 27 Continental Airlines Inc
(CAL.N), the world's fifth-largest airline, joined the Star
Alliance on Tuesday, becoming one of the top airlines in this
network of 25 global carriers.
The switch marks the first time a major airline has
switched alliances and brings Continental closer to UAL Corp's
UAUA.O United Airlines about 18 months after merger talks
ended between the two carriers.
"We decided to upgrade our alliance to a first-class
alliance," said Continental's President and Chief Operating
Officer Jeff Smisek at a media event.
Joining the Star Alliance allows Continental to share
pricing, scheduling and other information within the alliance,
which also includes U.S. Airways LCC.N.
Continental expects its membership in the Star Alliance,
the world's largest airline network, to reap $100 million a
year. In 2008, the airline drew $15.2 billion in revenue.
Smisek noted that no other carrier in the alliance had a
strong foothold in the New York area, a hole that can be filled
by Continental's hub in Newark Liberty International Airport.
In turn, United offers opportunities up and down the West Coast
of the United States that Continental lacks.
"What you want is to ally yourself with carriers that offer
flight opportunities that you yourself don't offer," Smisek
told reporters. He is poised to become Chief Executive of the
airline on Jan. 1, 2010.
Shares of Continental were up 1.2 percent to $12.17 in
afternoon trading on the New York Stock Exchange, while the
Arca Airline index .XAL fell nearly 1.6 percent.
A MARQUEE EVENT
In his remarks, Continental's CEO Larry Kellner noted that
United played an instrumental role in bringing Continental into
the folds of the Star Alliance.
After the two airlines ended merger talks last year,
United's CEO Glenn Tilton offered to sponsor Continental's
foray into its network.
"In the current economic environment, the role of alliances
takes on an even greater significance," said Tilton, who is
also chairman of the airline. "No one single carrier can
profitably serve every market."
Continental was previously part of SkyTeam, which is now
led by Delta Air Lines Inc (DAL.N), now the world's largest
carrier after its merger with Northwest Airlines last year.
That union relegated Continental to a junior partner in
SkyTeam, Smisek said.
The U.S. Transportation Department gave its final approval
of Continental's switch in July.
Continental's entry into the Star Alliance was greeted with
much fanfare Tuesday.
Lights flickered and music blared as top executives from
each airline in the alliance took their seats in front of
reporters. Then the gray backdrop behind them dropped to reveal
a plane emblazoned with the words "Star Alliance."
"We can offer our corporate customers today a lot better
alternatives than a week ago," Continental's current CEO, Larry
Kellner, told reporters.
(Reporting by Deepa Seetharaman, editing by Gerald E.
McCormick, Bernard Orr)