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On 1st October last, UAL Corporation (the parent company of United Airlines) completed its acquisition of Continental Airlines and changed its name to United Continental Holdings, Inc following approval of the merger by the U.S. Department of Justice on 27th August. The merger was brought about through a stock-swap deal that was approved by the Board of Directors of both airlines on 2nd May 2010. Although the two airlines remain separate until the operational integration is completed, both airlines are corporately controlled by the same leadership. Operating under the United brand but the new livery retains much of the Continental style. Nearly half of the total fleet, or 601 aircraft, are now repainted in the new livery as the airline moves towards a single designation by the Federal Aviation Administration in mid 2012.

Dublin and Shannon

Earlier this summer, Continental Airlines senior management visited Ireland to promote the new merged brand as Continental Airlines has been the operator all of the company’s services in Ireland to date. Charles Duncan, the airline’s transatlantic, Middle East and India vice-president visited Dublin and was keen to point out that as a result of the merger “nothing really changes except we will have a bigger network”. Acknowledging that “United has zero brand recognition” in Ireland he accepted that they would have “to work hard to get our message across”.

Continental carried 124,996 passengers in the first five months of this year on its Dublin and Shannon routes and since it began servicing Ireland in 1998, it had carried 3.3 million passengers. He confirmed that Continental expects to fly about 8% more American passengers to Ireland this year than last and said they had been reasonably surprised at the sustained level of demand for seats to Ireland from the US despite the tough economic conditions on both sides of the Atlantic. With four flights a week in its summer schedule from Shannon he believes that “there’s certainly a market there”. Shannon is a profitable route. “We wouldn’t be increasing our services from there if it wasn’t” he added. The load factors on its 175-seat Boeing 757 aircraft average more than 80%.

Madrid-Washington

Mr Duncan described the United – Aer Lingus joint venture on the Madrid-Washington route as "an interesting and innovative project". This route however could be at risk following the merger. While it is valuable to Aer Lingus, it is probably less valuable to United and losing a third code-share partner (after Delta and American) however, would be bad for Aer Lingus. When it was launched, United was short of suitable equipment and had no money. Continental however operates a Boeing 757-200 service to Madrid from Newark and this could provide a feed in their network at least as good as Washington. In addition the joint venture operation has been very sensitive to the unions who consider it as ‘outsourcing’.

Madrid-Washington

Demand from Belfast has weakened with many from Northern Ireland flying from Dublin due to the high Air Passenger Duty (APD) on US flights north of the border. Continental Airlines notes that a family of four travelling from Belfast to Newark will pay £240 (€273.64) in taxes. “If they go on the modern road to Dublin airport, they are paying €12, so in other words, they are paying over 20 times more in departure tax in Belfast than they are in Dublin. That differential is going to increase when the Irish Government gets rid of the tax altogether”. At the moment, the airline is forced to “absorb the duty” of between £60 (€68.41) and £120 (€136.82) a head to ensure passengers “do not leak over the Border to services in Dublin”. This message was emphasised in Belfast by Bob Schumacher, the airline’s managing director of sales for Britain and Ireland who said that at some point, someone somewhere will say “enough is enough”. Continental has been operating Belfast - Newark since 2005 and carries about 100,000 passengers per year where the load factor is similar to the Dublin service. It is estimated to be worth around £20 million (€22.8 million) a year to the Northern Ireland economy and is a key business and tourist link. It is a key consideration for investors and has strong demand from corporate customers such as Caterpillar. Mr. Schumacher revealed that the route is actually loss-making, although he blamed the APD noting that the airline has already paid just over £1 million (€1.14 million) to date in APD to the UK treasury and is likely to pay in the region of £3.2 million (€3.65 million) for the full year. Mr. Schumacher told the Northern Ireland Affairs Committee that the APD is the equivalent of the first seven weeks of revenue from the flight going straight to the Treasury, a situation he added that cannot go on "indefinitely". North Antrim MP Ian Paisley junior pressed as to a timeline for a decision asking whether it would be fair to say the airline would be beyond that cusp in a year's time. Mr Schumacher's response left the committee in no doubt about the looming threat to the route. "It's more immediate than that," he replied insisting however there were "no plans" to shut down the service and flights were scheduled until at least Christmas. The Northern Ireland Affairs Committee is investigating the practicalities of devolving the power to set Air Passenger Duty to Stormont. Separately, Continental was forced to deny claims by Mr. Paisley that there have been proposals to substitute the route for a Chicago flight out of Dublin and that the Irish government promised a huge tax break if it agreed to withdraw its Belfast to New York service. Responding, Nick Britton, managing director of Continental's international and corporate communications said that “while we will not speculate publicly about future route network expansion, we deny categorically that United Continental has been offered any financial incentives to end its Belfast-New York service”.

Merger on track?

United and Continental continues to make steady progress integrating products, services and policies and the process is on track and should be completed by the end of the year. Together with United Express, Continental Express and Continental Connection, these airlines operate an average of 5,765 flights a day to 377 airports on six continents from their US hubs. The combined entity hopes to realise more than $1 billion (€695 million) in annual revenue benefits and cost savings by 2013 and with more than 80,000 employees, a lot of work is needed in integrating the workforce at the two carriers. Agreement with its 12,000 pilots on a new contract has yet to be reached and President and Chief Executive Officer, Jeff Smisek has said that "until an agreement is reached, this merger cannot be considered anything close to a success". In early, July it was confirmed that Continental plans to offer jobs to as many as 200 pilots who were furloughed by United Airlines who currently have 1,437 on furlough. United flight attendants have already rejected a company offer to shift some of them to Continental. The company has said that United will soon have too many flight attendants as almost 1,800 return from voluntary furlough, while it will be 900 short at Continental.