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United and Continental closer to becoming the world’s largest carrier

Thursday, July 29th 2010 - 05:52 UTC
Full article

Continental and United airlines received this week the approval of European regulators permitting the two carriers to move ahead with their plans to create the world’s largest carrier.

On the list of things the airlines are required to do in order to carry out the proposed merger, securing the approval of European regulators wasn’t expected to be the biggest obstacle. The deal still has to be signed off by the Department of Justice and Congress, which industry experts expect will involve much closer scrutiny.

In May, after years of on-again, off-again merger talks, Continental and United announced they would combine their companies. The 3 billion US dollars, all-stock deal puts Continental’s Chief Executive Officer Jeff Smisek in the pilot’s seat, but leaves the ‘United’ name on the combined company.

The blessing of European regulators — one step in a process that may take about five more months to complete — came on the same day the airline announced the names of senior managers who will lead the new carrier. The airline’s board of directors is expected to formally elect the executives to vice president positions when the merger closes later this year.

A merger of the two companies was always considered daunting because of the disparate cultures of the two airlines, but the new management team combines an equal number of executives from both Continental and United. For example, Jim Compton, who joined Continental in 1995, was among the new officers named by Smisek. Compton will become chief marketing officer for the new company. And Pete McDonald, a 41-year veteran of United, will serve as chief operations officer.

“This team represents a great blend of experience and expertise at both airlines,’’ Smisek said. The remainder of the management team is expected to be named before the merger closes.

In their announcement, European anti-trust regulators said they didn’t believe the merger would interfere with air travel competition in their countries.

”United and Continental’s networks are complimentary as they have hubs in different U.S. cities, European regulators said in an e-mailed statement: ”the proposed merger therefore only leads to small, incremental increases in the market shares of the parties.’’

The route systems of the two airlines don’t overlap extensively, which is one reason they were always considered a good match.

United, which has its hub in Chicago, flies to more than 230 international and domestic destinations. Continental, the dominant carrier at Newark Liberty International Airport, flies to 132 locations in the U.S. and 137 destinations around the world.

Categories: Economy, Uruguay.
Tags: Airlines.

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