United, Continental merger takes flight

May 3, 2010 4:17:01 PM PDT
United Airlines is spending a bundle to buy Continental Airlines in a mega-merger that will create the world's largest airline.

The new company's planes will have a familiar look borrowing images from both airlines.

The deal is worth more than $3 billion but still requires the approval of shareholders and anti-trust regulators.

The new airline will be based in Chicago and will fly to 370 destinations in 59 countries.

"We're creating an airline that has a far brighter future than any of us individually could have created on our own," said Jeff Smisek, Continenal Airlines CEO.

Continental's chairman would be the new boss of the merged airline. United CEO Glenn Tilton would serve as a non-executive board chairman.

Its name would still be United and Chicago will remain its headquarters, but its planes would carry the Continental look and tail logo.

"This is not a defensive combination of companies. This is a combination of companies that creates future opportunity," said Glenn Tilton, United Airlines CEO.

There's very little overlap in the 370 destination cities worldwide that United and Continental together now serve. There would be job losses - most likely in mid-level management - but both companies say the bulk would be handled through retirement and attrition.

"There's a right way and a wrong way to do this. We would prefer to see it go the right way. If it goes the wrong way, then we have a problem," said Capt. Herb Hunter, Airline Pilots Association.

United's pilots say the merger looks good on paper, but they want a voice in the deal and recovery of their big pay cuts during United's bankruptcy.

"We certainly want to move the process forward and get an industry leading contract and that hasn't changed one iota," said Capt. Wendy Morse, Airlines Pilots Association.

"I like having a hub in Houston and New York, so for me, that's a good thing," said Chris Heineman, frequent flyer.

"Competition would be gone, so I think being so large, they could probably get away with doing whatever they want," said Tori Krappa, Scranton, Pennsylvania.

More mergers means less competition means higher fares though arguably fees were climbing even before the most recent airline mergers.

"When the airline industry, as the economy gets better not only in the U.S but in the world, how do you unscramble the egg and have the competition we'll need then?" said Prof. Aaron Gellman, Northwestern University transportation expert.

The justice department must approve the merger before the marriage can take place, and they will certainly be examining what the airlines say they need to remain viable and competitive in a global marketplace. They'll have to weigh that against what it'll mean to the flying public.


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