Business Studies update from John Birchall
The ash cloud may have disappeared from both the news and the skies over Northern Europe but is the announcement that are to merge the first a line of consolidations within the airline industry?
The US-based United Airlines and Continental Airlines have agreed a deal to merge, creating the world's biggest carrier. The loss-making companies see the expected deal to be worth $3.2bn (£2.1bn) and to deliver savings of more than $1bn a year. The combined group will be named United Airlines and the new branding will combine the current Continental colours with the United Airlines name.
The world’s leading airlines
1 - American Airlines
2 - United Airlines
3 - Delta Air Lines
4 - Air France
5 - Continental Airlines
6 - Lufthansa
7 - Southwest Airlines
8 - British Airways
9 - Northwest Airlines
10 - Emirates
The parent company will be named United Continental Holdings Inc. The airline will operate under the United name, and aircraft will have the Continental logo and colors, the companies said. Together, the airlines fly to 370 destinations in 59 countries and plan to continue service to all those points. United and Continental also are ranked third and fourth in the U.S. by traffic. United and Continental had almost $29 billion in combined revenue last year.
Their main jet fleets total 700 aircraft, and they now employ more than 88,000 workers. Besides Washington and New Jersey’s Newark airport, their other hubs are in Chicago, Denver, San Francisco, Los Angeles, Houston, Cleveland and Guam. It will also have a 21 percent share of the huge US air market.
This is the second major ‘consolidation’ within the embattled airline industry – last month British Airways and Iberia announced a major thought to save the airlines 400m euros ($533m; £350m) a year. The new company will be called International Airlines Group, but the BA and Iberia brands will continue to operate as normal. The company will have its headquarters in London, with BA shareholders retaining 55% ownership of the company.
One is left wondering who will be next? Also, what of customer choice?
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