This ain't good folks - not good AT ALL! Folks in my hometown are just now realizing what this will mean - HIGHER fares!

Continental sold US OUT!

Combined Chicago-based airline would be industry’s largest
By JENALIA MORENO
HOUSTON CHRONICLE
May 3, 2010, 7:29AM

For more than a quarter- century, through bankruptcies, skyrocketing fuel prices and mounting threats from low-cost competitors, Continental Airlines called Houston its home.

Now the airline plans to merge with United Airlines, taking United's name and its home base of Chicago.

After less than three weeks of courtship, the two announced today they will merge after each board approved the deal Sunday, according to sources.

For passengers, the marriage will likely lead to higher fares on some routes. For the new airline, the consolidation is intended to cut costs, boost revenue and increase market share.

“Since these companies are losing so much money they realize now is the time to do it because it's getting more difficult to survive in this industry and the only way they can see a light at the end of the tunnel is by combining operations,” said Gustavo Grullon, finance professor at Rice University.

Airlines have struggled financially for years, and Continental is no exception with two bankruptcies in its history, government help after Sept. 11 and $1 billion lost since those terrorist attacks. Two years ago, it discussed merging with United, but instead formed an operational pact through the Star Alliance, which includes United.

The two carriers went back to the negotiating table after news that United's on-again, off-again talks with Tempe, Ariz.-based US Airways resumed.

Two weeks ago, US Airways withdrew.

The deal, which earlier bogged down over price, is a stock-swap. Continental shareholders get 1.05 United shares for each Continental share they own.

That values the deal at about $3.2 billion, based on Friday's closing share prices and the latest publicly available outstanding shares. United's shareholders will own a 55 percent stake in the merged company, and Continental's the remaining 45 percent.

Big savings by 2013
The combined company's 2009 revenues were $29 billion. The merger is planned to result in savings and additional revenue of $1 billion to $1.2 billion annually by 2013.

Jeff Smisek, chairman, CEO and president of Houston-based Continental, will be CEO of the merged carrier, with offices in Houston and Chicago. United CEO Glenn Tilton will become non-executive chairman until Dec. 31, 2012, or on the second anniversary of the closing of the deal, whichever is later. Then, Smisek takes the helm as chairman.

Other management executives have yet to be named but are expected to come from both airlines. The combined airline's board of directors will have 16 members, including Smisek, Tilton, two union members and six directors from each of the company's boards. United has 13 board members now, including Tilton and two union members. Continental has 10 board members including Smisek and no union members.

Houston is expected to be the largest hub of the combined carrier and continue to be its gateway to Latin America.

Jobs at the combined carrier will be cut by attrition, retirement and voluntary programs, but Houston employment may grow in the long term since Houston will likely add destinations.

“The employees at the Houston hub, they are going to stay there. It's the most profitable of the Continental hubs,” said Pete Garcia, president of aviation consulting firm Pete Garcia International. Garcia isn't involved in the transaction, but he's familiar with both airlines' operations.

Politicians tried to remain optimistic about the move from Houston.

Mayor Annise Parker said in a written statement Sunday city leaders will work to “aid in the long-term success of the stronger airline expected from this merger.” She was encouraged that Houston would remain an operational hub.

“Our message has been clear and consistent that Continental should add jobs in Texas and we stand ready to work with the company and the city of Houston to help make that happen,” said Rick Perry's spokeswoman, Allison Castle.

Airline employees and passengers are worried.

In a release announcing a Monday morning press conference, United pilots union officials wrote: “It is important to remember that history has demonstrated that the integration of two airlines is always a difficult challenge. The support of the pilots is pivotal in determining whether a merger is successful or not, as will be the case with this merger of Continental and United.”

Susan Arensman, an engineer for an energy company, said she's afraid prices will go up. She flies to many destinations served by both Continental and United and she's worried that with less competition, her company will pay more for tickets.

The merger is planned to close by year's end, pending shareholder and regulatory approval.

Government antitrust enforcers must review “whether or not the merger tends to lessen competition,” said Darren Bush, an associate professor at the University of Houston Law and airline expert. “The big focus is going to be on nonstop markets.”

The merger results in 13 nonstop overlapping flights, including flights from Houston to Denver, Chicago, San Francisco and Washington, D.C., according to a JP Morgan report released Friday. Those will likely be closely examined by the Department of Justice.

JP Morgan airline analysts, in a report last week, gave the merger a 75 percent chance of getting regulatory approval.

Good reputation
If it merges, the new United faces the challenge of combining two distinct corporate cultures and customer service reputations.

“I think Continental has a better reputation and I don't know why we have to be called United,” said a Continental gate agent who didn't want to be identified.

United emerged from a three-year bankruptcy in 2006 but the ordeal created morale problems because unions had to agree to wage and benefit cuts. By comparison, Continental is known for fostering good employee relations.

“Let's just hope that they adopt Continental's corporate culture. It's dramatically better than United's,” said Dean Headley, associate professor of marketing at the W. Frank Barton School of Business at Wichita State University, which released its annual airline quality report in April.

Continental climbed to sixth place in the ranking from eighth last year while United dropped to 13th from 11th.

“Continental is a great airline,” said Headley. “United — they've always been somewhat problematic.”

http://www.chron.com/disp/story.mpl/business/6986235.html

Guhreat! Sometime between 4/1 and 6/30/2011 - 500 folks will lose their jobs!

Continental to lay off hundreds of employees in Houston

HOUSTON -- The job cuts stemming from Continental Airlines’ merger with United Airlines are about to hit downtown Houston.

Continental has notified state regulators that it plans to lay off about 500 employees at its Houston headquarters.　

The airline plans to reduce its workforce in two downtown skyscrapers, at 1600 Smith and at 600 Jefferson.　 The layoffs will be permanent, the airline says, but it says the offices at those two locations "are not being closed in their entirety."

snip


http://www.khou.com/news/local/Continental-to-lay-off-hundreds-of-employees-in-Houston-115497389.html

Not a good sign Blue sorry to hear...

Another casualty of big business shrinking jobs yet telling the politicians that it will lead to job growth if they approve the merger

At least they did not sell to the Chinese!!

Or maybe through the amount of bonds the Chinese have bought, they own it all anyway?