U.S. panel seeks more answers from UAL/CAL on merger

WASHINGTON Wed May 26, 2010 7:00pm EDT

Passengers check in at the Continental Airlines counter right next to a United Airlines counter in Chicago's O'Hare International Airport May 3, 2010. REUTERS/John Gress

Passengers check in at the Continental Airlines counter right next to a United Airlines counter in Chicago's O'Hare International Airport May 3, 2010.

Credit: Reuters/John Gress

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WASHINGTON (Reuters) - United Airlines UAUA.O and Continental Airlines CAL.N should provide more information about their merger to a U.S. congressional committee concerned about possible job and service cuts, key lawmakers said.

House of Representatives Judiciary Committee Chairman John Conyers and competition subcommittee Chairman Henry Johnson said on Wednesday the companies' written responses failed to answer key questions raised by the panel.

The two Democrats said United and Continental did not provide specific information about possible job reductions related to the merger to create the world's biggest airline, which was proposed on May 3.

The airlines told the panel that they expect few layoffs from the integration of 87,000 employees and carrier operations due to the fact that there are few overlapping routes and no common hubs.

The lawmakers also said the companies "failed to provide sufficient assurances" about service, refusing a committee request to commit to retaining all of their hubs.

United and Continental told the panel that such a promise would not allow proper flexibility to make business decisions, the lawmakers said.

The new airline, to be called United and based in Chicago, will be positioned as a stronger entity with an unmatched global reach, experts said.

United said in a statement it was "respectful of the process" but that it would be "inappropriate for two separate companies to provide the answers they are seeking."

Houston-based Continental said in a separate response it plans to further address the committee's concerns at next month's scheduled hearing on the merger.

The Judiciary Committee has oversight of the Justice Department, including its antitrust division, whose job is to review the merger's impact on competition.

United's and Continental's chief executives, Glenn Tilton and Jeff Smisek, will testify before U.S. Senate antitrust and commerce panels on Thursday.

Continental' Smisek will lead the new airline.

Antitrust experts, analysts and industry consultants see few if any regulatory problems and widely anticipate government approval of the deal.

Tilton told reporters on Tuesday that he is "very optimistic" the carriers will be able to satisfy any concerns raised by Justice Department antitrust officials by year's end.

U.S. airline shares were broadly higher on Wednesday. Continental closed up 5 percent to $20.92 on the New York Stock Exchange, while UAL shares were up 4.1 percent to $19.75 on the Nasdaq.

(Reporting by John Crawley; Editing by Bernard Orr and Steve Orlofsky)

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