Smisek defends United-Continental merger

In federal court in San Francisco, Jeff Smisek testified that joining together United and Continental would increase revenue and cut costs. However, a suit by consumers claims it would cause higher fares and fewer jobs.

On Tuesday, Smisek took the witness stand to respond to a lawsuit seeking to prevent the deal. According to the suit, a merger would create a monopoly, increasing fares and costing jobs.

The two airlines were granted regulatory approval last week to combine under an all-stock deal announced May 3. The new company would surpass Delta as the world’s largest airline and mix United’s Pacific routes with Continental’s service in Latin America and over the Atlantic.

Joseph Alioto, a lawyer representing consumers in the suit, displayed internal Continental “Hub Stats”, documents projecting “optimized” flight networks for the merged airline in various cities such as San Francisco and Cleveland, to Smisek.

The document proved a reduction of 37 departures, a 19% cut for Denver. The documents were used in order to evaluate the merger, however, according to Smisek, the data from the documents are “insufficient” to base concrete decisions on because they rely on projections and not facts.

Source: Los Angeles Times