The deal between United and Continental that was signed last week will make the largest airline, transporting 120 million passengers a year, and revenue of about $30 billion.
The airline will be called United Airlines, and Chicago will be the place of its corporate headquarters. The goal is to create annual cost savings and increased revenue of up to $1.2 billion.
Commercially, the new airline is a good fit. The two companies complement one another with Continental being strong in regards to North Atlantic and South America routes, and United having a strong grasp on Pacific and Asian markets.
The new company will have 10 main airports serving 370 destinations in 59 different countries. The combination will have a stronger hub serving New York (JFK and Newark airports).
This is good news for the new company, but not for Delta, who will feel increased pressure which will now be the second-largest global airline with 120 million passengers. American is in third place with 93 million.
However, American’s number would jump to 155 million if a merger with British Airways eventually goes through.
Perhaps most importantly, the merger between United and Continental is not likely to create significant concerns among competition authorities. It also won’t hold any large position in key international airports such as London Heathrow, which continues to trouble the American and British Airways joining.
Congressional hearings will be held, the airline needs to obtain regulatory clearance by the end of the year.