World’s Biggest Airline Coming: Continental-United Merger Approved

August 28, 2010

(ChattahBox)—Soon, consumers will have fewer options in airline travel, with the number of major carriers reduced to just four. The Department of Justice approved the proposed merger between Continental Airlines and United Airlines, after the companies convinced government officials that the merger would not stifle competition and result in higher prices for consumers. And if you believe that as the saying goes, “I have swampland in Florida to sell you.” Rep. James Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee, condemned the proposed merger during a hearing in June, lashing out at the airline executives, saying “You guys hate competition.”

The merger still needs to be approved by the shareholders and Oberstar and other lawmakers will not be happy, but with the stamp of approval from the Justice Department, it looks like a done deal.

“In a statement, the Justice Department said it was satisfied that the airlines did not have so much overlap in their routes that consumers would be harmed by higher prices and limited flight choices.”

“The combination of the country’s third and fourth biggest airlines means the number of industry players – and options for fliers – continues to shrink. Upon completion, the proposed $3.17 billion merger will leave just four traditional carriers in the United States, and possibly three if American Airlines responds by bidding for US Airways, as some analysts predict.”

The Justice Department’s statement continued, adding a “thorough investigation” was conducted to ensure competition survived the merger:

“The department conducted a thorough investigation. The proposed merger would combine the airlines’ largely complementary networks, which would result in overlap on a limited number of routes where United and Continental offer competing nonstop service.”

The Department’s concern with competition at Newark’s airport was resolved by Continental transferring its slots to its competitor Southwest Airlines.

“The transfer of slots and other assets at Newark to Southwest, a low cost carrier that currently has only limited service in the New York metropolitan area and no Newark service, resolves the department’s principal competition concerns and will likely significantly benefit consumers on overlap routes as well as on many other routes.”

Once the two airlines merge, the new company flying under the United banner, would become the world’s largest airline


Comments

4 Responses to “World’s Biggest Airline Coming: Continental-United Merger Approved”

  1. dennis on August 28th, 2010 3:33 pm

    Same old corporate behavior in America. Buy the competition to minimize competitve behavior and then the sell cycle begins because they can’t be competitive because of size. The only ones to ever profit are the engineers of such behavior and their financial sponsors. America’s banks and big buisness… our trusted allies.

  2. King chuck on August 28th, 2010 5:20 pm

    “number of carriers reduced to four”. Say what? There are 14+carriers who are considered “legacy” and “national” carriers. Include the “regional” carriers and there are well more than 25 carriers operating in the United States. The US has BY FAR the most competitive airline industry in the world-period. No other country has the choices we enjoy. Additionally, fares are cheaper now (adjusted AND in some cases not adjusted for inflation) than they were 20 years ago. Let the industry attempt to make money for God sakes

  3. The Stock Tutor » Blog Archive » Continental closer to United tie-up – Telegraph.co.uk on August 28th, 2010 10:00 pm

    […] Department clears United, Continental merger for takeoffWashington PostUSA Today -ChattahBox -AFPall 790 news […]

  4. The Investing Tutor » Blog Archive » Continental closer to United tie-up – Telegraph.co.uk on August 28th, 2010 10:15 pm

    […] Department clears United, Continental merger for takeoffWashington PostUSA Today -ChattahBox -AFPall 790 news […]

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