United Airlines' quest for a large-scale tie-up has ended with a "virtual merger" with Continental Airlines, an agreement to link international networks, share technology and passenger perks that could eventually lead to a formal merger between the carriers.

The alliance is an important victory for United CEO Glenn Tilton, whose reputation as a deal-maker appeared tarnished after merger discussions with three carriers, one of them Continental, didn't result in a deal. It also signals that the Chicago-based carrier is positioned to be a survivor in the shake-out that lies ahead for U.S. carriers if oil prices remain at present levels, analysts said.

"It is a vote of confidence in United as a business partner by Continental," said Henry Harteveldt, travel industry analyst with Forrester Research Inc, "and proof that United intends to stay in business."

The pact, signed by the airlines' CEOs in Chicago yesterday, had its roots in the failed United-Continental merger talks. Continental announced the deal was off in a terse announcement on April 27, just days before a deal was expected to be unveiled, saying it intended to pursue a strategic alliance rather than a potentially disruptive merger.

Observers thought Continental was alluding to Fort Worth, Texas-based American Airlines, with whom it had also held talks.

But Tilton saw an opening and seized it, contacting Continental CEO Larry Kellner the next day about a partnership that would bring the Houston-based airline into the Star Alliance, the global constellation of carriers that United co-founded.

"We began the work that led to the agreements announced today that take use well beyond the benefits of a standard code-share," Tilton told United employees yesterday.

The deal that resulted will bring most of the benefits of a merger, analysts said, without the mess and high costs of merging disparate workforces. "Importantly, this gets them an even more attractive end-to-end global network," said Robert Mann, president of aviation consulting firm R.W. Mann & Co.

United and Continental intend to code-share domestically, an agreement that enables them to sell seats on each other's flights, link their frequent-flier programs and share access to airport lounges aimed at business travelers.

Continental will join the Star Alliance and form a series of global joint ventures with United, protected by antitrust immunity, linking their route networks on key overseas markets. The first such joint venture will involve flights across the Atlantic, flown by the carriers and Star members Lufthansa and Air Canada.

If they receive the blessings from U.S. and European regulators, the four carriers could closely collaborate on scheduling, marketing and even the type of aircraft used on a given route. Such arrangements typically involve sharing expenses among partners and divvying up the profits that accrue from linking carriers as well as new markets.

The Star partners envision the venture as a response to a similar close partnership involving SkyTeam, the global marketing alliance that currently includes Continental as well as Delta and Northwest Airlines, which are merging. All of the major SkyTeam partners, save Continental, recently gained antitrust immunity to coordinate flights across the North Atlantic.

"I see it as a precursor to a potential merger, a date before you get married," Harteveldt said.

The new alliance isn't likely to take effect for at least a year. Continental must wait for Delta and Northwest to complete their merger, triggering a provision that will free Continental from its SkyTeam contract. Continental must also give nine months' notice before it exits that alliance.