Airline merger could impact O'Hare expansion

May 4, 2010 (CHICAGO)

But if it gets the stamp of approval, the merger would create the world's largest airline, which would be based in Chicago. And Chicago is home to O'Hare International Airport, which is in the middle of an expansion.

"Chicago just got a whole lot more competitive," said Glenn Tilton, CEO of United Airlines, Monday when the merger was announced.

That's presuming that government regulators will approve the proposed merger of United and Continental airlines. The bosses say they think regulators certainly should and argue that there is little overlap in the cities they serve, so it's not anti-competitive because they don't really compete now. Still, winning government approval is not a slam dunk.

"We've been talking about this for the past couple years, working on consolidation, looked at all the options and we feel we have a very strong case to make this successful," said Jim O'Connor, United board member.

The mayor sees the merger as part of a winning trifecta: Chicago would be home to the world's largest airline, world's largest airplane manufacturer and a remade O'Hare Airport.

"Any slowdown, any stalling of modernization effects the future of this merger, effects customers and the future of the airline industry," said Mayor Richard M. Daley.

O'Hare modernization is moving forward, but there is friction between the city and airlines. Airlines have balked at increased landing fees and are resisting the cost of phase two of O'Hare Expansion; they say the proposed western terminal is something they don't want and won't pay for.

"I haven't paid a lot of attention to O'Hare expansion because O'Hare wasn't important to me until today," said Jeff Smisek, Continental Airlines CEO.

The man who will be the CEO of the new United says he needs a little time to study the O'Hare expansion issue and that western terminal, which the city and neighboring suburbs want.

"Everything's on the table and you talk to everything. Like everything else, it's one part of the modernization. It's only one part of it. Not the essential part of it," said Mayor Daley.

The mayor's remark "not the essential part of it" doesn't mean the city is giving up on its push for a western terminal. But it does suggest the project could keep moving forward without a firm airline commitment for funding it. The priority rests with funding new runways.

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