Continental,United join to fight rising fuel costs

Shares of United parent UAL Corp. jumped 24 percent, and Continental shares rose 16 percent.

In striking a deal with United, Continental ended alliance negotiations with American Airlines, the nation's biggest carrier, and British Airways.

Under alliances, airlines typically work together to sell tickets on each other's flights, which can result in increased revenue.

Alliances are easier to put together than mergers, which can run into opposition from labor unions or regulators.

But alliances have their limits. Without antitrust immunity from regulators, airlines are barred from working together on prices and schedules. And airlines that merge can shed overlapping routes, planes and workers.

Continental said it would seek antitrust immunity from the Transportation Department to form joint ventures on trans-Atlantic flying with United and Lufthansa, and eventually on flights to Latin America and Asia.

But in the U.S., the Continental-United deal will be limited to code-sharing--selling tickets on each other's flights and offering reciprocal frequent-flier and airport-lounge programs.

Continental and United said they also hope to reduce costs by working together. Airlines have reduced capacity and raised fares and fees as fuel costs surged.

Continental Airlines Inc. and United said they will link their networks and join the Star Alliance, one of three competing teams of airlines around the world.