Court Upholds Massive Merger
A U.S. District Judge found that plaintiffs failed to show that United Airlines' merger with Continental would create a monopoly and ruled Tuesday that the merger shouldn't be blocked on antitrust grounds. Attorney Joseph Alioto, who filed the suit on behalf of consumers said he will appeal the ruling. United and Continental expect their merger to close, Friday. They expect to operate separately until they receive paperwork from the FAA later in October. Alioto says the merger will create an entity that is "too big to fail." Alioto's opinion aside, the $3.17 billion deal that is United's acquisition of Continental will create the world's largest carrier. According to Alioto, "There's very little regard for their passengers and everybody seems to know it." The airlines argued in court that the merger would bring stability to the industry and allow cost savings to be passed to consumers. Meanwhile, analysts are considering what other airlines may do to compete with the new mega-airline.
American Airlines lost the title of world's largest airline in 2008 when Delta and Northwest merged. The new United/Continental merger puts extra pressure on American, industry analyst Robert Mann told Reuters. Mann believes American may be running out of good potential partners for a merger. But strategic alliances have been used by airlines for years and may present a viable alternative. Meanwhile, Southwest Monday announced it would attempt to buy AirTran for $1 billion as the industry's strategic reshuffling continues.