Mon, May 03, 2010
Matchup Yields Biggest Airline In The Biz... and Possible Woes
For Consumers
While most of us were trying to enjoy the weekend, the
powers-that-be at United and Continental were reportedly cooking up
a deal that was completed Sunday afternoon to merge the two
companies to create the world's 'Largest' airline. The estimated
$3.7 Billion dollar stock purchase would allow UAL to buy the
entire stock of Continental in an all-stock transaction that is
expected to close before the end of the year and will retain
United's brand name. The combined value of the two companies is
estimated at well over $8 Billion.
As we understand it, the announcement is likely to be made later
today (Monday) and would install Continental Boss, Jeffery A.
Smisek, as the head of the new company, while United’s
chairman, Glenn F. Tilton, would be nonexecutive chairman for two
years. Mr. Smisek will take of the role of executive chairman,
thereafter.
The new entity's HQ remains in Chicago in UAL's current digs and
will result in a fleet of some 700 aircraft and over 88,000
staffers. United shareholders allegedly will hold a 55% majority of
the stock in the new venture. Simultaneously; like Eastern, PanAm
and Braniff airlines before them, a once powerful airline brand
will cease to be part of the aviation lexicon.
Industry analysts see the move as a probable win for
UAL/Continental and a possible loss for the flying consumer who has
had to put up with increasing fees, higher ticket prices and a
significant decline in customer service and decorum... the combined
merger provides little incentive for these airlines to make any
inroads in matters of interest/importance to the flying public and
history suggests that the merger will not result in positive
benefits for same. Analysis of the impact on UAL and Continental
staffing remains mixed.
ANN will analyze the details expected to be made public
throughout the day and furnish further updates as they become
available.
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