Continental May Sell Pacific Assets to Delta

Continental Airlines is exploring the sale of some Pacific assets to Delta Air Lines, Continental’s top executive said Thursday.

Financially troubled Continental--which recently acknowledged that it had considered a Chapter 11 bankruptcy filing--has said it would like to dump some assets. The Houston-based airline is suffering under accumulated debt and spiraling fuel costs.

Delta, by contrast, is among the strongest U.S. carriers. Industry analysts expect a renewed wave of consolidation, with weaker airlines merging into stronger ones, reorganizing or disappearing.

Hollis Harris, chairman and chief executive of Continental, said at a Houston luncheon Thursday that assets under discussion are Continental’s Pacific operations. But he also said the airline would try to raise cash by means other than asset sales and avoid “any move that will hurt our people.”

Delta spokesman Neal Monroe confirmed that talks are under way but gave no specifics.

Harris was president of Atlanta-based Delta until he resigned last summer to take the top slot at Continental. Continental owns the majority of Air Micronesia, a regional carrier in the South Pacific. It flies to Tokyo from Seattle and Houston and has several flights to Australia and New Zealand from Houston.

Ray Neidl, an airline analyst with Dillon, Read & Co., a New York brokerage, said if the assets under discussion include Continental’s Pacific routes, the routes alone would be worth “a couple of hundred million dollars.” Other analysts, however, valued them as high as $800 million.