Merger Won’t End Obstacles Facing United, Continental – WSJ.com
The merger of UAL Corp.'s United Airlines and Continental Airlines Inc. won't be a panacea, and the combined carrier must continue to innovate and evolve if it hopes to become financially sustainable, UAL Chief Executive Glenn Tilton said Thursday.
Mr. Tilton, speaking at what could be the last annual meeting for United in its current form, also said the entire airline industry must change dramatically for the merged carrier to be able to produce profit margins that businesses in other sectors routinely earn.
The planned marriage would bring together two complementary route networks, opportunities to earn more than $1 billion in additional revenue and would lead to an improved corporate culture, he said. The Justice Department, which is weighing the plan, recently made a second request for information of the two carriers, a routine step in big mergers, United said.
The combined carrier, called United, would be based in Chicago but fly under Continental’s logo and colors.
The stock-swap plan, announced in early May, would create the world’s largest airline by traffic. Continental CEO Jeff Smisek is set to run the combined carrier, which would keep the United name and Chicago headquarters but fly under the logo and colors of Houston-based Continental. Mr. Tilton would become non-executive chairman for two years.
To prepare for a deal closing late this year, the two carriers already have embarked on integration planning, forming a steering committee of executives to oversee it and establishing about 30 teams of employees to delve into the many details of aligning functions ranging from maintenance to sales to information technology.
Mr. Tilton disclosed Thursday that the companies have hired consultants from Bain & Co. to help with that process, an assignment the Boston firm carried out in the 2008 merger of Delta Air Lines Inc. and Northwest Airlines Corp. Bain declined to comment.
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