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United-Continental Airlines Merger Raises Antitrust Concerns: Part 1

On Wednesday, the CEOs of Continental Airlines Inc. and United Airlines parent UAL Corp. defended their plan for a merger to skeptical members of Congress. Lawmakers are concerned that a merger will lead to higher fares, job losses, and a decreased quality in service.

One of the most vocal detractors was House Transportation Committee Chairman James Oberstar (D-Minnesota). He said that he would continue to fight this merger just as he had the eventually successful merger of Delta Airlines Inc. and Northwest Airlines Corp. in 2008. He believes that the combination of airlines over the last 30 years has been bad for travelers, airline workers, and small communities. He said that if antitrust regulators at the Justice Department do not block the merger, he will push for the government to begin regulating the airline industry again.

The merger involves a $3 billion stock swap and would create the world’s largest airline by traffic. The CEO of Continental, Jeff Smisek, and UAL CEO, Glenn Tilton, said that a merger is needed for the companies to be able to continue to compete worldwide. They said that there will be few job losses and the combined company will be more financially stable.

The chief executives believe that their merger proposal will be approved by federal antitrust regulators. They currently are gathering some supplementary information requested by the Justice Department, which they expect to turn in by July. The CEOs are hoping to finish the deal by the end of the year.

 

Source:

WSJ UPDATE: CEOs Defend United-Continental Merger Plan (Wall Street Journal)

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