United, Continental Await Shareholder Vote on Merger

It hasn't been easy for United Airlines and Continental Airlines to work out a merger that pleases everyone.

It's taken two and a half years just to come this far, and the merger has already faced some serious opposition. Earlier this year, the carriers had to appease the Department of Justice when competitors filed complaints that the merger would be unfair or might violate antitrust laws.

"Mergers typically fail in one of two places," Thomas Lys, who teaches about mergers and acquisitions at Northwestern University's Kellogg Graduate School of Management, told USA Today. "The first place is that it's a stupid deal. It just makes no sense, because there are no efficiencies to be gained from it. The second is that while it makes sense, you can't pull it off."

The deal between United and Continental makes both fiscal and operational sense, Lys says. By 2013, the new carrier expects to generate up to $900 million more every year in revenue than the two generate today and realize up to $300 million in cost savings. "But," Lys continued, "the integration phase of this is not going to be that simple. Airlines are not simple companies. They have complex financial structures. And there are huge labor and operations components that will have to be harmonized in order for those efficiencies to be obtained."

The next crucial step in the proposed $3 billion merger will come this Friday, when the two airlines' shareholders will gather to vote on the deal. While the deal makes sense fiscally - it would create the world's largest and most capable airline, with routes spanning the entire globe - some frequent fliers are having a more visceral emotional reaction that's giving them a little bit of pause.

"While flying, I constantly hear Continental's most-frequent fliers commenting that as the Continental corporate culture moves closer to that of United, they will seek other airlines," Mark Silberfarb, who has logged more than 1 million miles on Continental, told the Chicago Tribune. "The real problem is that a really good apple is merging with a bad apple, which will result in spoiled fruit."

Silberfarb isn't the only Continental fan who's concerned about the effect the merger will have on the brand's top-notch customer service. Many others are concerned that the carrier's Presidents Club lounge open-bar policy might vanish along with the Continental name. And United flyers have their worries, too - such as the loss of Channel 9, which lets nervous passengers listen in on cockpit conversations with air traffic control, and Economy Plus seating, which offers extra legroom.

There are other small details, too. For example, the two airlines will need to decide how to merge their boarding policies. Traditionally, Continental has boarded passengers from the rear of the plane forward, while United boards those with window seats ahead of those seated in the aisle or middle.

To appease these concerns, the airline has assured flyers that travelers checking in for flights will be able to use either airline's kiosks and that both United and Continental's frequent-flier plans will be combined to offer upgrades, free flights and other services. The airlines admit that travelers will need to exercise patience for a few days while the merger is completed and say all the details will be worked out after "Customer Day One" - the nickname given to the official roll-out of the new carrier.

The yet-to-be-disclosed date, speculated to occur early next year, will mark the debut of the airline's new signage - the Continental globe logo will replace the United "U" on United's planes, while United's brand will continue to appear on the jets.

It's been a long road, but the deal is scheduled to be completed on October 1.