Says She Expects It Will Be Approved, But It's A "Hard Sell" In Texas

During a Senate Commerce, Science, and Transportation Committee hearing Thursday on the proposed merger between United Airlines and Continental Airlines, Senator Kay Bailey Hutchison (R-TX) (right), Ranking Member on the Committee, said she was disappointed with the proposed merger decision.

Airline executives Glenn Tilton and Jeff Smisek told the committee in a joint statement that the merger comes at a critical juncture for the U.S. aviation industry, which has confronted extremely difficult business challenges for the last decade. They told the committee that the industry has lost over 150,000 jobs, and there have been nearly 40 bankruptcies since 2001. U.S. airlines have lost a total of $60 billion since 2001.

The executives told the committee that the proposed merger would bring together two of the most complementary route networks of any U.S. carriers. The merger would combine United’s Midwest, West Coast and Pacific routes with Continental’s service in New York/New Jersey, the East Coast, the South, Latin America and across the Atlantic, they said.

Smisek and Tilton also said the merger would preserve more jobs than would be lost in the transaction. They said the merged airline would continue to fly to all of the communities currently being served, and any necessary reductions in front line employees will come from retirements, normal attrition and voluntary programs. The said the focus would be on creating cooperative labor relations, including negotiating contracts with collective bargaining units that are fair to the company and fair to employees. While the merged company’s headquarters will be in Chicago, Houston would continue to have a significant presence, and the airline would remain one of Houston’s largest private employers.

However Senator Hutchison said she was skeptical about Smisek and Tilton's assessment of the merger's effect on Houston, and the airline industry in general. “The proposed measure is going to have dramatic impact on my home city of Houston and certainly on the people who work at Continental,” she said.  “It is a hard sell in Texas and I am disappointed in the decision to merge because I have worked very hard to support alliances so that we could avoid a merger. I have worked hard in my Senate term to promote the long-term viability of the airlines, whether they are based in Texas, or elsewhere in the country.  While I appreciate the fact that Houston will remain the largest hub of the new carrier, and there have been promises that it will have a bright future, I remain concerned about the ramifications to employees at Continental who make the Houston area their home.”

Senator Hutchison said she expects the merger will likely be approved after receiving review by the Department of Justice and the Department of Transportation, but she remains concerned about the impact on employees, pensions, and the overall integration of the two varied cultures of the respective airlines.

FMI: http://commerce.senate.gov/public/