Judge: Continental CEO must clarify 'discrepancy' over UAL merger

Continental Airlines Inc. Chief Executive Officer Jeff Smisek must clarify a "discrepancy" in his court testimony about a proposed merger with UAL Corp., a judge said.

U.S. District Judge Richard Seeborg in San Francisco today agreed with Joseph Alioto, a lawyer for consumers in the antitrust suit who argued Smisek gave potentially conflicting testimony in court about models projecting how many flights might be cut if the merger goes forward.

Continental, based in Houston, and UAL's Chicago-based United Airlines unit received regulatory approval last week to combine under an all-stock deal announced May 3. The airlines were sued in June over claims their proposed merger would create a monopoly, increasing fares and costing jobs.

Of "particular importance to me" is Smisek's answer to Alioto's question yesterday of whether there is more than the single report on the flight cuts for each airport presented in court, Seeborg said. "His answer to that is, 'I don't know the answer to that question.'"

Smisek's response in court yesterday conflicted with his comments in a statement Continental issued today, Alioto told Seeborg. The statement followed a news article in the Cleveland Plain Dealer newspaper that used reporting from Bloomberg News citing Continental's projected service reductions in Cleveland.

"The reports were based on one of many simulations analyzed before the merger was announced," Smisek said in the statement. "Other simulations showed Cleveland maintaining its size and others showed it growing."

'Extremely Important'"If such simulations exist, they are extremely important because they show pre-merger intent and motive," Alioto told the judge. If Smisek is recalled as a witness, "he'd have to say he's mistaken or he'd have to say he has something," Alioto said.Seeborg said he will decide later today whether he will ask Smisek to submit a declaration to the court clarifying his statements, or require a deposition."Mr. Smisek looks forward to providing the clarification," Julie King, a Continental spokeswoman, said in an e-mail.The case is Malaney v. UAL Corp., 10-02858, U.S. District Court, Northern District of California (San Francisco).