United and Continental Airlines will merge to form the world's largest airline, the two companies said in a press release Monday. The combined airline would surpass Delta Air Lines as the world's largest, a title United previously held for more than three decades. The carrier would retain the name United and maintain headquarters in Chicago. The United double-U logo, introduced in 1974, will be replaced by the Continental globe and colors.
The merger will still be subject to a number of regulatory approvals, a process that normally takes several months. Mergers are not always approved; a 2002 attempt by United to merge with US Airways was struck down on antitrust concerns, however the large Northwest/Delta combination was approved in 2008. US Airways recently broke off another round of talks with United. United and Continental, however, have route systems that largely do not overlap - Continental's Houston and New York City hubs are far removed from the bulk of United's network, and the carrier's focus on Latin America and secondary destinations in Europe also sees little duplication.
The merger is expected to complete in an all-stock exchange, leaving roughly half the shareholders from each airline in posession of the combined company, with United shareholders holding slightly more.
USA Today reports some analysts expect fares to trend upwards as a result of the consolidation, however many in the industry say consolidation is necessary because airfares have been artificially lowered below the cost of providing transportation by a flooded market for seat inventory for over a decade.
Yet to be discussed are the understandably difficult task of integrating two different corporate cultures. Management relations with workers are relatively sunny at Continental Airlines, and somewhat more standoffish at United, where bulletproof glass was once installed in the executive office during a 1985 dispute with pilots that only ended after a lengthy strike. Some United workers may be relieved to see Glenn Tilton, current CEO eventually leave the company, which a source says is expected to happen within a few years of the completed merger. Continental CEO Jeff Smisek will take over the CEO spot, while Tilton will remain as non-executive chairman. United employees (and some passengers) once wore wristbands that proclaimed "Glenn's Gotta Go".
The job site Glassdoor.com where workers rate their job quality, salary, and management reports 13% of site users who are current or former employees of United approve of Tilton's job running the company. Smisek, who took the reigns of Continental from Larry Kellner only this year, is too new to have garnered a rating.
The combined airline will serve 370 destinations in 59 countries and fly an estimated 144 million passengers per year. A website explaining what the combined company will look like can be found here.
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