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United, Continental Shareholders Approve Merger

SmarterTravel

Shareholders at both United and Continental voted today to approve the proposed merger between the two carriers. The Associated Press (AP) reports the approval vote topped 98 percent at both companies. There was virtually no doubt that both groups of shareholders would overwhelmingly support the merger.

According to the AP, “With the voting over, the real work begins, including combining two separate groups of highly unionized workers, merging reservations systems and putting new paint jobs on the planes.

“It likely will be some time before passengers notice much difference when they fly Continental or United. The companies expect it will be at least a year before federal authorities approve their request to fly as one airline.”

So far, the merger of two of the U.S.’s largest carriers has been surprisingly smooth. Even government approval of the deal came easily, after predictions that the Department of Justice (DOJ) might give the merger a long, hard look, in light of concerns that the industry is consolidating too much. But there was little apparent resistance from the DOJ, which granted antitrust immunity once the airlines agreed to give up slots at Newark, one of Continental’s primary hubs. Those slots were leased to Southwest.

At this point, there’s no reason to think the merger won’t proceed just as smoothly, though the remaining hurdles—mostly labor issues—are by no means easy to clear. The AP reports Continental CEO Jeff Smisek, who will head up the merged carrier, hinted at layoffs due to overlapping jobs, though he did not give specific numbers.

And even though the merger may go smoothly, there are still concerns that it will have a negative impact on passengers. Many worry that with Delta and United controlling 40 percent of the domestic market, fares have nowhere to go but up. United, however, counters that it will compete with low-cost carriers on most routes, and this competition will keep fares reasonable.

 

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