The U.S.
Department of Justice on Friday approved the proposed merger of Continental
Airlines and United Airlines, hours after Continental agreed to lease 36 slots
at Newark Liberty International Airport to Southwest Airlines, which said it
would inaugurate service in March 2011.
The federal
approval removes one of the final major obstacles to the merger, which Continental
and United now expect to close on Oct. 1, the carriers said in a statement.
Both companies have scheduled stockholder meetings on Sept. 17 to approve the
deal, and the attorneys general of several U.S. states are reviewing the
merger, but no major impediments are expected.
The European
Commission said in July it would not contest the merger.
"We are
pleased to have achieved this critical milestone and look forward to our
respective stockholders' votes next month, following which we expect to be on
track to close our merger by October 1st," said Glenn Tilton, chairman,
president and CEO of United parent UAL Corp.
A DOJ
statement said that the transfer of Newark slots to Southwest, which operates
no service from the airport, satisfied its "principal concerns"
regarding the merger. The move "resolves the department’s principal
competition concerns and will likely significantly benefit consumers on overlap
routes as well as on many other routes," DOJ said.
DOJ called
the current Continental and United networks "largely complementary,"
pointing to routes between Newark and United hubs as the primary source of any
anticompetitive concern, as "Continental has a high share of service and there
is limited availability of slots, making entry by other airlines particularly
difficult."
Southwest,
which has never served Newark, said it would operate as many as 18 daily
roundtrips using slots it would lease from Continental, with a schedule
beginning in March 2011 and fully implemented by June 2011. The carrier has not
yet determined the cities it would serve from Newark, but said it would do so
using its existing fleet. This would be the low-cost carrier's second foray
into the New York metropolitan area in as many years, after beginning service at
LaGuardia Airport in 2009. The carrier also serves Long Island MacArthur
Airport in Suffolk County, N.Y.
"We are
excited by the opportunity to initiate service from Newark, N.J., and we plan
to enable that service starting next March through continued flight schedule
optimization using our existing fleet," said Bob Jordan, Southwest
executive vice president of strategy and planning. "We've seen tremendous
demand for Southwest Airlines in the New York City/Newark area in the past
year. This service also will provide a needed injection of low fares and
competition into the New York/Newark market."