United, Continental shareholders vote
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BILL RADKE: Shareholders of United and Continental Airlines will vote today on the airlines’ proposed merger. The deal could close in two weeks, if the shareholders approve. Marketplace’s Nancy Marshall Genzer joins us live from Washington. Good morning.
NANCY MARSHALL GENZER: Good morning.
RADKE: Why do these two airlines want to merge?
MARSHALL GENZER: Well Bill, at this point mergers seem to be the only way to get more market share. Continental and United say they’ll be able to attract more business travelers. United has a strong presence in the Midwest, West Coast and over the Pacific. Continental is strong in Texas, and along the East Coast. Plus it has a lot of routes to Europe and Latin America.
RADKE: We’ve seen a lot of airline get together, Nancy. How effective have they been?
MARSHALL GENZER: It’s mixed. Remember, American airlines merged with TWA during the recession of 2001. American dropped TWA’s St. Louis hub after a few years. It also furloughed most of TWA’s workers. So that merger may have been good for those airlines, but it wasn’t good for their employees. U.S. Airways and America West merged in 2005, and their unions still don’t get along.
RADKE: If United and Continental team up, will passengers notice any difference?
MARSHALL GENZER: Well the airlines say they won’t. The airlines say they’d continue to operate separately for at least a year after the merger, while they wait for permission from the FAA to merge their fleets. But some passengers expect there will be changes — things like higher fares and fewer flights. And that’s why several dozen passengers have joined together to file a lawsuit trying to block the deal. A federal judge in San Francisco is scheduled to hear closing arguments in that case today.
RADKE: Marketplace’s Nancy Marshall Genzer in Washington. Thanks, Nancy.
MARSHALL GENZER: You’re welcome.
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