The Challenges of the Continental-United Merger

The merger of United and Continental Airlines (NYSE:UAL) has been a rocky one, facilitated in large part by integration chief Lori Gobillot’s daily endeavors to facilitate the transition.

Different labor unions represent the workers of Continental and United. The Delta-Northwest (NYSE:DAL)
merger has shown how labor disagreements can poison a merger, as Delta Airlines remains bogged down in labor disputes three years later. Furthermore, the planes themselves differ considerably in terms of their structural offerings, a factor that could potentially complicate marketing strategies. Nonetheless, United Continental (NYSE:UAL) has told Wall Street that the union will weather the integration tumult and earn $1.2 billion in new revenue within three years.

Gobillot has been working around the clock to ensure that potential sources of contention get sorted out in advance so that they do not plague the airline moving forward. Her 33 interdisciplinary integration teams are hard at work to devise the most harmonious solutions for the new airline on a case-by-case basis, with issues ranging from the quickest way to board passengers to the perks that should be included in the frequent-flier program. Her group has had a lot of pull so far, even overriding the initial assumptions of CEO Jeffery Smisek in several instances.

The megacarrier resulting from the marriage will be the world’s largest airline with planes in 373 airports and major hubs in New York, Chicago, Houston, San Francisco, Washington, Los Angeles, and Tokyo.

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