United and Continental will help launch Southwest in Newark as part of merger plan
By APFriday, August 27, 2010
United, Continental to help Southwest in Newark
DALLAS — United and Continental will help Southwest Airlines Co. expand in the New York market to help clear a path to their own combination, which would create the world’s biggest airline.
United and Continental said Friday they would lease takeoff and landing slots at Newark (N.J.) Liberty International Airport to Southwest beginning next March.
The move would increase competition in Newark for Continental, which has a hub there, and United. Southwest operates a few flights at New York’s LaGuardia Airport but none at Newark or Kennedy Airport.
The fingerprints of antitrust regulators could be seen on Friday’s announcement.
United and Continental were frank in saying the arrangement with Southwest was designed to address U.S. Department of Justice concerns about the proposed United-Continental combination.
“We think this would be a fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network … while enhancing domestic competition at Newark,” said Jeff Smisek, the Continental chairman and CEO who will lead the new airline, to be called United.
Bob Jordan, Southwest’s executive vice president for strategy, said, “We appreciate the Department of Justice’s role in finding a fair solution.”
Continental Airlines Inc. and United, a unit of UAL Corp., operate 442 daily roundtrip flights in and out of Newark. Under the deal announced Friday, Southwest would get enough slots from Continental to operate up to 18 roundtrip flights there by June 2011.
The deal hinges on United and Continental completing their merger by Nov. 30.
Mike Boyd, an airline and airport consultant in Colorado, said giving up a few slots at Newark was an easy decision for the combining giants.
“United and Continental want to get this merger done,” Boyd said, and if federal regulators “stick their nose in there and say, ‘Give something up,’ they’re going to give it up.”
Southwest’s Jordan said Newark would complement his airline’s service at LaGuardia and increase competition in the New York market. Southwest said it was still deciding what cities it would serve from Newark. From LaGuardia, it flies only to Chicago and Baltimore.
Freed reported from Minneapolis.
