Monday, May 03, 2010

United-Continental merger plans announced

by B. N. Sullivan

United Airlines B787This morning United Airlines and Continental Airlines officially announced their plans to merge. The announcement, which came as no surprise, confirmed rumors that had been circulating for some time. The companies' announcement billed the transaction as "a merger of equals" rather than as a takeover of one airline by the other.

Jeff Smisek, the current CEO of Continental, will run the merged operation. Glenn Tilton, the current president and CEO of UAL Corp., United's parent, will serve as non-executive chairman of the new company's Board of Directors for a period of about two years.

The new mega-carrier, which will serve 370 destinations around the world, will carry the United name, but with aircraft dressed in Continental livery. The holding company for the operation will be called United Continental Holdings, Inc.

The corporate headquarters for the new company will be located in Chicago, but also will have offices in Houston, where Continental is presently headquartered. Houston also will be the new airline's largest hub.

Quoting from the press statement that announced the merger:
The combination of United and Continental brings together the two most complementary networks of any U.S. carriers, with minimal domestic and no international route overlaps. The combined company will offer enhanced service to Asia, Europe, Latin America, Africa and the Middle East from well-placed hubs on the East Coast, West Coast, and Southern and Midwestern regions of the United States. The combined company will have 10 hubs, including hubs in the four largest cities in the United States, and will provide enhanced service to underserved small- and medium-sized communities. The combined carrier will continue to serve all the communities each carrier currently serves. Together, Continental and United serve more than 144 million passengers per year as they fly to 370 destinations in 59 countries.

Employees will benefit from improved long-term career opportunities and enhanced job stability by being part of a larger, financially stronger and more geographically diverse carrier that is better able to compete successfully in the global marketplace. The companies believe the effect of the merger on front-line employees will be minimal, with reductions coming principally from retirements, attrition and voluntary programs. The company will provide employees with performance-based incentive compensation programs focused on achieving common goals. The combined company will be focused on creating cooperative labor relations, including negotiating contracts with collective bargaining units that are fair to the company and fair to the employee.
The carriers intend to close the deal by the end of this year, subject to approval by their respective shareholders and regulatory authorities.

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