In a joint press statement this morning in both Houston, Texas and Chicago, Illinois, the long-expected merger of United Airlines (UA) and Continental Airlines (CO) was announced.
The deal has been heralded as “a merger of equals” although with the possible exception of Continental’s boss, Jeff Smisek, who will head up the new company, it appears that United Airlines has come off rather more equal than Continental in the deal seeing as how the new, combined airline will be called … United Airlines.
United will be sporting the existing Continental colours and livery – including the distinctive globe tail fin, but it is hard to see how Continental can trumpet the merger as one of equals. Airlines, as a rule are referred to by their name, not the colour of their aircraft tail fins!.
The new combined United Airlines now becomes the world’s largest airline (based on flown passenger miles).
United and Continental have been competing in the same airspace now for many years, so it is inevitable that there will be a shedding of staff; either through redundancies in the future or through normal wastage, as many roles are now duplicated. On the face of it, United Airlines (as was) seems to be taking the lead in the new company which leads us to believe that most of job losses that come down the pike will be borne by the former Continental Airlines staff.
Customers will be largely unaffected by today’s news as it will take some time for any changes to fully work their way through the system. The most likely difference is that holders of Continental tickets will find themselves boarding a United Airlines aircraft, but this is nothing new in the airline industry.
It is unsurprising that United Airlines and Continental have decided to merge as both companies lost tens of millions of dollars last year – many of which would have been spent wooing each others customers away. Those dollars can now be better spent on services at the terminal and in the air. One would hope that the result is a better, more efficient and comfortable journey for passengers.
With British Airways merging with Iberia a couple of weeks ago, and now this merger, we could be starting to see a trend emerging. There is much talk about who will be the next airlines to form partnerships in the near future; airlines like US Airways and American Airlines will no doubt be keeping a very close eye on the success or otherwise of the new United Airlines as both have been linked with their own mergers in past years.
The new combined airline aims to reduce combined annual operating costs by by between $1.0 billion and $1.2 billion by 2013, and the eyes of the aviation world will be upon them while they try. Should the cost savings prove successful, watch out for a flurry of mergers in the coming few years.
Combined United Airlines statistics:
Staff: 86,000
Serviced locations: 370
Annual turnover: $29 billion (US)
United Airlines: http://www.unitedairlines.com
Continental Airlines: http://www.continental.com
Merger press release: http://www.unitedcontinentalmerger.com/press-release
