United-Continental Merger
Robert J. Carbaugh, Central Washington University Koushik Ghosh, Central Washington University
Recommended Citation: Carbaugh, Robert J. and Ghosh, Koushik (2010) "United-Continental Merger," Journal of Industrial Organization Education: Vol. 5: Iss. 1, Article 1. DOI: 10.2202/1935-5041.1034
Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM
United-Continental Merger
Robert J. Carbaugh and Koushik Ghosh
Abstract
This case study discusses the nature and likely effects of the proposed merger between United and Continental. It is intended as a lecture for instructors teaching undergraduate courses in Industrial Organization or Antitrust Economics KEYWORDS: United, Continental, Merger, Antitrust
Unauthenticated | 62.189.189.132 Download Date | 6/6/13 12:08 PM
Carbaugh and Ghosh: United-Continental Merger
United-Continental Merger
On May 2, 2010, the Boards of Directors at United Airlines and Continental Airlines approved a stock-swap deal that will combine them into the world’s largest airline. The combined carrier will have 21 percent of domestic flying capacity, taking the lead from Delta Air Lines, which will lose what had been its leading 20 percent share of the domestic market. The deal still needs final approval from the U.S. Department of Justice and shareholders before being allowed to go forward. The firms hope to complete the transaction in the fourth quarter of 2010. According to the management of United and Continental, the proposed merger will generate streamlined service and greater efficiencies that result in cost savings and revenue increases, helping the newly merged firm return to profitability. However, critics note that the merger will involve the consolidation of two competing firms; whenever you have
