S&P looks at UAL

Standard & Poor's said that it explores the next steps United Air Lines Inc.'s parent, UAL Corp., may take now that Continental Airlines Inc. has bowed out of the current round of consolidation.

The agency posits that US Airways Group Inc. (B-/stable) as the most likely merger partner for UAL (B/negative).

"The principal drawback of a merger with US Airways is that, while it would improve UAL's route system, it wouldn't create as strong a route network as would a combination with Continental [B/negative/B-3]," said S&P credit analyst Philip Baggaley.

Continental's hubs in Newark and Houston would have filled gaps in United's route system, which is strongest in the Midwest, West and across the Pacific, the agency added.

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