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Continental CEO defends merger with United in trial

Continental Airlines Inc. Chief Executive Jeff Smisek defended a proposed merger with UAL Corp., testifying in federal court that combining the airlines would “increase our revenue and decrease our costs.”

He took the witness stand Tuesday in San Francisco to respond to a lawsuit seeking to block the deal. A merger would create a monopoly, increasing fares and costing jobs, according to the suit.

United and Continental received regulatory approval last week to combine under an all-stock deal announced May 3. The new company would surpass Delta Air Lines Inc. as the world’s biggest airline and mesh United’s Pacific routes with Continental’s service in Latin America and over the Atlantic.

Joseph Alioto, a lawyer representing consumers in the suit, showed Smisek internal Continental “Hub Stats” documents projecting “optimized” flight networks for the merged airline in various cities such as San Francisco and Cleveland. For Denver, the document showed a reduction of 37 departures, a 19% cut.

The documents were used “to get an idea of what the combined network would look like” to evaluate the merger, Smisek said. The data from the documents are “insufficient” to make concrete decisions because they rely on projections and not actual information from United, Smisek said.

The merger would create monopolies in seven nonstop routes, including San Francisco to Newark and Houston, and Denver to Newark and Cleveland, Alioto said.


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