UAL, Continental await holders’ votes
NEW YORK: UAL Corp.'s United Airlines and Continental Airlines Inc. await shareholder approval next month for their $3 billion allstock merger creating the world's largest carrier, after the U.S. government cleared the deal.
To win Justice Department backing, the companies agreed to give up rights for 18 daily round-trip flights at Newark airport in New Jersey to Southwest Airlines Co., and the agency said yesterday it had closed its antitrust review.
"Airlines are now using these slot-swap deals as trade bait," said Bob Mann, a former American Airlines executive who runs consultant R.W. Mann & Co. in Port Washington, New York. "It's the new grease for regulatory approval. Slots are one area where regulators like to see some give-ups."
The Justice Department's action moved UAL and Continental toward their goal of closing their merger by Oct. 1. Newark Liberty International Airport will be a new destination for Southwest, the largest discount airline. Continental operates a hub at Newark for domestic and international flights.
"The transfer of slots and other assets at Newark to Southwest, a low-cost carrier that currently has only limited service in the New York metropolitan area, and no Newark service, resolves the department's principal competition concerns," t he Justice Department said in a statement.
UAL and Houston-based Continental announced plans May 3 to merge in a stock swap valued yesterday at $3 billion, based on data compiled by Bloomberg. Each Continental share will be exchanged for 1.05 shares of Chicago-based UAL. The European Union approved the merger on July 27. -Bloomberg