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United And Continental Determined to Merger, Become World's Largest Airline

April 30, 2010 at 3:13 PM | by | Comment (1)

Heh. It turns out that sometimes airline industry analysts get things exactly right. When we wrote up rumors of an airline merger between United and US Airways a few weeks ago, we dumped a bunch of articles on you with people insisting that the smarter merger would be between United and Continental. Compared to US Airways, Continental has fewer overlapping hubs with United, better access to South America, and a strong presence in New York—all huge pluses. A United-Continental merger would also give United a a title boost: "world's single largest airline."

We commented at the time that the objectively better deal isn't always the deal that gets struck, but in this case it looks like that's exactly where we're heading. Confirming previously reported rumors that United and Continental were looking past US Airways and at each other, the two airlines appear set to confirm a merger as soon as Monday:

Continental Airlines Inc. and UAL Corp.'s United Airlines are expected to announce Monday that they are merging to form the world's largest airline, people familiar with the matter said. UAL's board of directors is meeting Friday, while Continental's board is meeting Friday and Sunday to discuss the deal, these people said. These people cautioned that negotiations could still fall apart as they did in 2008, when Continental backed away. But after a hiccup over pricing, the talks appear on track, they said.

United is in a stronger position than they were in 2008, having seen their financial picture rise relative to Continental. If this deal goes through the Continental brand will disappear eventually—many say that it's already been falling precipitously in the public eye—and United will be left with a giant global network. The big loser, obviously, is US Airways. The airline has long been seen as the weakest of the major airlines, and now they're getting left behind in an renewed era of mergers. It's like getting picked last in the gym for dodgeball, except there are billions of dollars at stake.

Meanwhile United executives get to sit back while travel journalists laud the company for having taken those journalists' advice. Expect to see not a few stories remarking on how sophisticated and brilliant United is for choosing Continental. Why look, here's one now.

[Photo: Juergen Lehle / Wiki Commons]

Related Stories:
· Airlines Approach Final Deal to Merge [WSJ]
· Continental [Jaunted]
· United [Jaunted]

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blech!

i disapprove of this entirely. now it seems it will be even harder to avoid flying united, which is the crappiest airline of them all.
juliana on May 3, 2010 at 8:44 AM #Permalink

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