Continental Airlines has abruptly called off a merger with United Airlines.


The pair had been in on-off talks for more than a year and were expected to move rapidly to a deal following the announcement last month of a merger between rivals Delta Air Lines and Northwest Airlines.


However, United issued a profit warning last week, reporting a pre-tax loss of $542 million for the three months to the end of March.


In a statement to Continental’s workforce, the airline’s chairman and chief executive Larry Kellner said: “The best course is for Continental not to merge with another airline at this time.


“The board considered all the risks and benefits of a merger and determined the risks outweigh the potential rewards.”