Confirmed on May 3rd, Continental Airlines and United Airlines have officially announced their upcoming merger, creating the world’s largest airline.
The merger will result in a network of 370 destinations around the globe. The merge of two of America’s largest airlines comes at a time when both are experiencing all-time lows, like many airlines right now. The new airline will keep the United Airlines name and push through with more strength than ever, financially, culturally and professionally.
Numbers show that with this new partnership, the airline is expected to carry around 144 million passengers each year. For European passengers, it doesn’t mean much, they will still fly with United as they have always done.
United Continental Holdings will be have its main hub in Chicago, with 10 other hubs around the country, serving destinations in almost 60 different countries around the world. This is just the first move for airline consolidations to start sharing routes, fares, schedules in all attempts to cut cost fuels and still offer great service to air passengers. Mergers are something many aviation analysts are predicting in the coming years, especially between big players in the aviation game.
Now, when many airlines are facing revenues that are down nearly 20%, they are looking for strength in numbers. A merger is the perfect solution, where the airline can then combine resources to buy aircraft and fuel. The first major merger happened in 2004 with KLM and Air France. Shortly after Lufthansa bought Swiss International Airline, BMI and Austrian Airlines. More recently, British Airways and Iberia merged creating the International Airlines Group.
As for “sustainable profitability” that many airlines are talking about now, it seems that merging is the only option to survive in an industry with over 1000 airlines. Unlike the auto industry, with only 20 some odd major companies, the airline industry is unique in numbers. As long as the air transport industry continues to slow down, airlines will have to merge if they want to stay afloat.
What are your thoughts on the merger? Any predictions for the airline industry in the future?