Friday, August 27, 2010

US Approves Merger of Continental and United Airlines

The New York Times is reporting that the proposed merger of Continental and United Airlines has been approved. It is expected that the deal will now move forward quickly and result in the world's largest airline.

According to The Times: In a statement posted on its Web site, the Justice Department said it had “closed its investigation” into the proposed merger after United and Continental agreed to give take-and landing slots to Southwest Airlines at Newark Liberty International Airport.

“United and Continental entered into the arrangement with Southwest in response to the department’s principal concerns regarding the competitive effects of the proposed United/Continental merger,” the Justice Department said in its statement.

This news I find especially exciting since we have been conducting a lot of research on mergers and acquisitions from a network perspective in both competitive, such as oligopolistic, settings, which is the industrial structure of many airlines, and in cooperative environments, such as in humanitarian logistics and operations where there may be teaming for disaster relief.

My paper, "Formulation and Analysis of Horizontal Mergers Among Oligopolistic Firms with Insights Into the Merger Paradox: A Supply Chain Network Perspective," has now been published online in the journal Computational Management Science and according to a message that I received yesterday from the publisher of this journal, Springer, it should be appearing in the hardcopy issue soon.

Another more personal connection is that my college room-mate from Brown University, Teresa Davila, is a United Airlines stewardess and language specialist. I hope that the corporate cultures of these two airlines mesh well so that the employees are comfortable when it ultimately takes place. I am a former Premier flier on United and my recent long distance flights on this airline were to/from spectacular Honolulu and to/from Buenos Aires, Argentina!