Continental-United airline merger approved by shareholders
The merger of Continental and United airlines was all but complete Friday after shareholders voted overwhelmingly to combine the two carriers into the world’s largest airline.
The new airline would be the busiest carrier at Los Angeles International Airport, overtaking American Airlines, which now serves about 15% of all passengers at the airport. Continental and United combined would serve about 17.5% of the passengers.
The carriers are slated to close their merger Oct. 1, when Continental Chief Executive Jeff Smisek will report to United’s Chicago headquarters to take over as chief executive of the new airline. The deal is on course to close less than five months after it was unveiled May 3, surprising observers with the speed and ease with which Smisek and Glenn Tilton, his United counterpart, gained approval from U.S. and European antitrust regulators.
But Smisek’s toughest challenge lies ahead: winning over workers at the larger United and forging new labor deals with unions hungry to recover pay and quality-of-life concessions.
“The issue obviously is what is going to happen to the various union groups,” said aviation analyst Julius Maldutis. “How they will be treated, and how they will treat Mr. Smisek.”
As Smisek and his team begin to knit the former competitors together into a single, sprawling carrier, they must also hammer out new labor agreements for every worker group, starting with the pilots union.
Smisek told Continental employees last month that he would like to have the new contracts in place by the time the new carrier completes its operational merger, gaining a single operating certificate from the Federal Aviation Administration. Delta and Northwest, which merged in 2008, took 14 months to accomplish that feat.
Once the process is complete, “then all our pilots can fly the combined carrier’s aircraft, all our technicians can maintain them, all our flight attendants can crew them, and we will be operating as a single carrier,” Smisek said in the Aug. 19 letter.
Management and pilot union leaders began negotiating a joint collective bargaining agreement last month and have made good progress, said Jay Pierce, who heads Continental’s pilots union. The two sides have reportedly reached agreement on six of the 30 sections in the contract and are close to terms on six other sections.
Pierce is optimistic that talks will move faster without the distractions of the financial merger. “Now this step has been taken, management can focus on negotiating our contract and putting their full, unadulterated efforts into getting the labor piece of the puzzle solved.”
Friday’s vote, whose outcome was never in doubt, was also a triumph for Tilton, who will become non-executive chairman of the new United after helping shepherd the deal. When the final ballots were tallied, 98% of voting shareholders at both carriers supported the $3-billion deal.
jjohnsson@tribune.com
