advertisement

UAL leaders detail merger to shareholders

UAL Corp. executives told shareholders Thursday that the new company, which would emerge from the proposed merger of United and Continental Airlines, would still need more work, such as cutting operational costs involving duplicative jobs and functions, to make it a world-class company.

United has hired Bain & Co., which worked with Delta Air Lines, to work on the merger and it is a massive, complex project, said UAL's CEO Glenn Tilton. The process already involves about 30 committees with leaders from both companies looking at every department, Tilton said, and even after all the necessary approvals and strategies, the new company still will need fine tuning.

"All our great work is still insufficient," Tilton said. "It's just not enough."

Tilton and other executives addressed about 150 shareholders during their annual meeting - perhaps for the last time on their Elk Grove Township campus and with United as it's known today. Shareholders for both United and Continental still need to approve the proposed merger that was announced May 3.

Tilton touted the advantages of the merger, saying it offers a truly global network, a New York hub, up to $900 million in new revenue and up to $300 million in cost savings, along with more financial opportunities and resources to carry the company into the future to battle stiff competition.

If the merger is approved, the integration process will drive how the new company will look, including what happens to its Chicago-area operations. United has been in the process of moving its Elk Grove Township workers, operations and crisis center into Willis Tower in downtown Chicago.

But Tilton said many things could still change, depending on the outcome of the shareholder vote and the integration plans, Those same operations may not all be housed at Willis and could end up in Houston, for example.

In addition, numerous negotiations continue with various unions about their contracts at United.

Union leaders, especially those for the pilots and flight attendants, seek to end the contention surrounding their pay cuts and other work-related issues. Several flight attendants and dispatchers even were outside the meeting with informational picketing.

Douglas McKeen, United's senior vice president of labor relations, said they're open to negotiating fair contracts for all the groups, but the most difficult had been the Association of Flight Attendants, even though they had met with them several times.

The AFA said their contract was due to be in place by January, but executives had proposed more concessions, said AFA spokeswoman Sara Nelson.

"This is a humanity issue," Nelson said. "Can executives truly claim United is a success when its front line workers are losing their homes, unable to buy meat at the grocery store and more likely to die on the job than be able to afford to retire? In a people business, doesn't it say something to passengers that the people at United are treated with such disdain? This is no way to run an airline. We are not motivated by greed, we are only demanding what is fair."