Breaking News - Greater Yuma Economic Development Corporation

Airline Merger Plan Expands Yuma Access

May. 3rd, 2010

As part of a planned merger between United Airlines and Continental, Yuma will gain direct flight service to the George Bush Intercontinental Airport in Houston. According to the website, unitedcontinentalmerger.com, Yuma will be one of three communities in Arizona served by the airline, along with Phoenix and Tucson. United already has a connection for Yuma to the Los Angeles International Airport through United Express, while Houston is Continental's hub. "This is terrific news," said Craig Williams, manager for the Yuma International Airport. He noted that the Houston airport provides a major gateway to the East Coast for business and personal travelers. "This has the potential for big benefits for our customers," he said. One in particular is Houston-based NASA, which leases a hangar at the airport and is conducting tests at Yuma Proving Ground. "Now they'll have a direct flight," Williams said. "This has got to be a huge benefit for them. "This will benefit the entire community. It can't come too soon for us." Julie Engel, president and CEO of Greater Yuma Ecomomic Development Corp., agreed. "This is awesome," she said. "Houston is becoming a leading energy center in the U.S. This will be a plus for our solar industry." A direct flight to Houston, increasing the Yuma area's accessibility and attractiveness, will be a boost for other economic development efforts as well, Engel said. She is excited on a personal level as well, she said, explaining that she has family in the Houston area. United has agreed to buy Continental in a $3 billion-plus deal that would create the world’s largest carrier with a commanding position in several top U.S. cities. The new United would surpass Delta Air Lines in size, which should help it attract more high-fare business travelers. It will fly to 370 destinations in 59 countries. The companies insisted the deal is a merger of equals. But United shareholders will hold a majority stake, the airline will be based in United’s hometown of Chicago and it will be called United. It would be run by current Continental CEO Jeffery Smisek, however. United CEO Glenn Tilton, a longtime advocate of consolidation in the airline industry, will be non-executive chairman for up to two years before Smisek adds the chairman title. The new parent company will be called United Continental Holdings Inc. and have about $29 billion in annual revenue based on 2009 results and $7.4 billion in unrestricted cash. The airlines said combining would save them $1 billion to $1.2 billion a year by 2013, including between $800 million and $900 million in new yearly revenue. The companies expect to close the deal in the fourth quarter, with approval needed from shareholders and regulators. The deal came together in just three weeks after reports surfaced that United was in discussions with US Airways, the nation’s No. 6 airline. ‘‘I recognized that United is the best possible partner for Continental,’’ Smisek said. ‘‘I didn’t want him (United’s Tilton) to marry the ugly girl; I wanted him to marry the pretty one, and I’m much prettier.’’ The deal would create a giant with major hubs in key domestic markets, including New York, Los Angeles, Chicago, Houston and San Francisco, and an international network stretching from Shanghai to South America. It will leave three big U.S. airlines with major international routes: the new United, Delta and American Airlines, with US Airways a distant fourth. United is the nation’s third-largest carrier by traffic, while Continental Airlines Inc. is No. 4. Shares of both companies rose in afternoon trading Monday. United parent UAL Corp. shares gained 47 cents, or 2.1 percent, at $22.06, and Continental shares rose 45 cents, or 2 percent, to $22.80. Two years ago, Continental walked away from a deal with United at the last moment. Smisek said in an interview that times have changed since 2008, when both airlines were low on cash and facing record fuel costs. Officials for the two airlines said it was too early to know what the impact of the deal would be on their 10 hub airports, which stretch from Newark, N.J., to Guam. They said they will eliminate some headquarters jobs in Houston and Chicago, but gave no numbers.

The Sun
May. 3rd, 2010

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