Lawsuit aims to block United, Continental merger

June 29, 2010 6:28:22 PM PDT
The planned merger of United and Continental Airlines is facing a legal challenge. A lawsuit was filed in Federal Court in San Francisco Tuesday morning, claiming the proposed merger amounts to a monopoly and violates the nation's anti-trust laws.

San Francisco attorney Joseph Alioto filed the suit on behalf of 48 plaintiffs from around the country. Alioto's lawsuit claims the merger will lead to increased fares, decreases in the number and frequency of flights, service cutbacks and loss of thousands of airline industry-related jobs.

The airlines announced their proposed merger in May. If regulators agree, it would create the world's largest carrier.

In a statement on Tuesday United Airlines spokesperson Megan McCarthy said, "We believe this lawsuit is without merit, and are cooperating with the Department of Justice as they thoroughly review our merger..."

One local economist says there's a tremendous potential upside for the company and consumers. Professor Zhan Li is head of the Economics Department at St. Mary's College in Moraga. He says the airlines would increase efficiency by merging departments like marketing and human resources. Their increased size would allow them to compete aggressively in the global market, and it can help them save money in terms of rising fuel costs and personnel.

Li says consumers could see an expansion of their frequent flier opportunities and there may be more convenience in dealing with one mega airline. Still, he cautions that it would depend on the strategy of United and Continental, if they view the merger as simply a way to enhance their bottom line or to offer high quality service to consumers.

Alioto calls the planned merger "an unmasked effort to steal from the people" and says he is confident the court will agree.


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