Lawmakers, unions express concerns over merger
By Christine Boynton Reactions to the United Airlines/Continental Airlines merger announcement were swift yesterday, with lawmakers representing CO hubs in Houston and Cleveland registering concern over how those cities will be affected and unions representing employees from both carriers pushing for management to take steps to gain workers' backing.
US Sen. Kay Bailey Hutchison (R-Tex.) noted that Houston-based CO has been an "integral part" of the Texas city's economy "for generations" and said she will "thoroughly review and monitor both the short- and long-term effects of this merger on both the Houston economy as well as on the competitiveness of the US aviation industry."Rep. Sheila Jackson Lee (D-Tex.), who represents Houston, expressed disappointment that the combined UA/CO will be headquartered in Chicago, saying she "remain[s] very concerned about this business deal and whether Continental and United Airlines took into consideration how this merger will impact the local community." She added that she intends "to scrutinize this merger to assess whether it complies with federal antitrust laws."
Ohio lawmakers also pledged to examine whether the merger will create antitrust issues. Cleveland.com reported that Mayor Frank Jackson has retained a law firm with expertise in airline mergers. Cleveland would be the smallest of UA/CO's combined 10 hubs and Jackson said he wants to ensure "that our airport is considered in this [UA/CO] system in a significant way." Sen. George Voinovich (R-Ohio) said he will "do everything in my power, along with the rest of the Ohio delegation, to ensure Cleveland maintains its hub."
CO Chairman, President and CEO Jeff Smisek said yesterday, "Cleveland will always be important." But he added that it "would be premature to speculate about Cleveland or any hub in terms of how things will shake out."
Meanwhile, labor groups expressed wariness. The Assn. of Flight Attendants representing UA flight attendants said in a statement that "a new contract with pay, benefit and work rule improvements must be concluded before [AFA] can consider support for the announced merger." The Air Lines Pilots Assn., which represents pilots from both carriers, said the merger "should be an opportunity to increase jobs, not decrease jobs." The International Assn. of Machinists and Aerospace Workers, which also represents workers from both airlines, said, "A Continental/United combination must have what many past mergers failed to achieve: Broad employee support."
The airlines said in a joint statement that the merger would benefit employees with improved long-term career opportunities and enhanced job stability and insisted that most reductions would come from retirements, attrition and voluntary programs.
American Airlines Chairman and CEO Gerard Arpey weighed in by saying he expects the merger to change the industry landscape in a number of ways, both positive and negative. "Only time will tell," he said. He added that "to some degree we have been competing with a combined United/Continental network since 2008, when those carriers formed a marketing partnership and Continental joined the Star Alliance."
