CHICAGO – Alliant CU, a one-time credit union for United Airlines, flew into new markets in Arizona, Texas and Southern California with an agreement to acquire ailing Continental FCU, the credit union for Continental Airlines and US Airways.
The deal will give $7.3 billion Alliant, which entered the California market two years ago by acquiring failed Kaiperm FCU, seven new branches in Arizona, California, Texas and New Jersey, including facilities at George Bush Intercontinental and Newark International airports, in Houston and Newark, N.J., respectively.
Alliant is one of a handful of well-capitalized credit union giants that are jumping into new markets with deals for troubled or failing credit unions, remaking the industry and increasingly consolidating credit union assets in fewer institutions.
The emergence of Alliant CU as a “White Knight” for troubled Continental comes three years after the one-time $200 million credit union fended off the industry’s first and only hostile takeover attempt from Minnesota’s Wings Financial CU, formerly the credit union for Northwest Airlines, insisting it could make it independently. But the markets wouldn’t cooperate, with Continental FCU wracking up losses of $11.2 million in 2008, $9.6 million in 2009 and $4.3 million for the first six months of 2010, as its net worth slid to just 3.4%.
“This merger makes sense for a number of reasons,” said David Mooney, Alliant’s CEO. “First, it is synergistic with our legacy sponsor United Airlines’ merger with Continental Airlines. Second, we will realize increased economies of scale which will reduce unit costs, strengthening Alliant’s cost advantage and further enhancing our financial value proposition. And third, we will increase our presence and access for our members in several other key large metropolitan areas where Continental Federal Credit Union operates.”
To facilitate the transition and merger, Rudy Periera, chief operations and technology officer for Alliant, will serve as interim CEO and will manage day-to-day operations of Continental, which moved from its traditional base outside Los Angeles to Tempe, Ariz., two years ago. Periera served the same function when Alliant acquired Kaiperm, a failed Oakland credit union in 2009.
