UAL Corp.'s United Airlines and Continental Airlines expect their proposed merger to close by October 1, now that companies have cleared the last major hurdle in their bid to create the world's largest airline. On Friday shareholders from both companies approved the transaction by a wide margin, as more than 98 percent of the votes cast by each group went in favor of the merger.
Major airline pilots have long complained about the practice of “outsourcing” flying to lower-cost regional carriers, despite the existence of clauses written into union contracts meant to limit the size and number of regional airplanes those affiliates may fly.
The U.S. Department of Justice has approved the merger of United and Continental Airlines, the carriers announced on Friday. UAL and CAL expect to close the transaction by October 1, assuming their respective stockholders vote to clear the deal next month.
An analysis of the competitive effects of the proposed merger of Continental and United Airlines by the U.S. Government Accountability Office (GAO) shows that combining the airlines would eliminate one effective competitor (defined as providing at least 5 percent of traffic between airports) in 1,135 city pairs, affecting almost 35 million passengers.
Houston-based Continental Express regional affiliate ExpressJet congratulated Continental Airlines and United Airlines on their agreement to merge, pending required regulatory approvals. ExpressJet currently operates 244 aircraft, including 206 for Continental as Continental Express and 32 for United as United Express. Based on May flight estimates, ExpressJet’s market share in the combined entity would represent approximately 30 percent.
The regional airline partners of United and Continental Airlines will no doubt face a period of some uncertainty as the major airlines prepare to merge their operations into the world’s largest international airline.
It appears United Airlines' public flirtation with US Airways might have generated the desired effect, as Continental Airlines has finally agreed to merge with UAL two years after Continental spurned United's last proposal to wed. The $3.2 billion merger would result in the biggest airline in the world and leave the U.S. with three major international carriers: the new United, Delta and American Airlines.
Boeing Commercial Airplanes faced fresh questions over its ability to stick to program timelines again last month.
The NTSB has dispatched a go team to the site where the crash of a Colgan Air Bombardier Q400 killed 50 people roughly six miles northeast of Buffalo Niagara International Airport at about 10:15 p.m. last night.
Pinnacle Airlines subsidiary Colgan Air signed a firm order last month to acquire 15 more Q400 NextGen turboprops worth some $432 million. The transaction involves the conversion of a conditional order for 10 airplanes to firm status and the exercise of options Pinnacle placed on five in 2007. Scheduled for delivery between August 2010 and April 2011, the latest tranche of turboprops would increase the size of the fleet to 30.