Perspectives
Observations on the airline industry, negotiations and other key issues of interest will be posted on an ongoing basis.
May 24, 2010
Moving Forward
A few weeks ago, United announced that we had signed a definitive agreement to merge with Continental Airlines. Over the next several months the two companies will seek regulatory and governmental approval. This merger is an opportunity for our two companies to create a world-class airline that is well positioned to succeed, and is expected to create improved long-term career prospects for employees at both airlines. We anticipate that the merger agreement will be approved later this year and that the integration will be complete by the first or second quarter of 2012.
United and Continental employees have the same unions for some employee groups but different unions for others. The following chart illustrates union representation for the largest employee groups at the two airlines.
| Employee Group | United | Continental |
|---|---|---|
| Pilots | ALPA | ALPA |
| Flight Attendants | AFA | IAM |
| Mechanics and Related | IBT | IBT |
| Flight Simulator Engineers | Included in Maintenance & Related | TWU |
| Ramp Employees | IAM | IBT |
| Stores Employees | IAM | Non-Union |
| Public Contact Employees | IAM | Non-Union |
| Dispatchers | PAFCA | TWU |
Our goal is to combine each work group as quickly as possible after closing, and the timing of this process will probably be different for different work groups. Combining employees into a single workforce can be a complex process, however, that could take a year or more to complete. There are some basic steps in this process:
- Seniority integration is led by the unions, and requires that the seniority lists of each work group be combined on a “fair and equitable” basis; the airlines usually do not participate in this process
- Determination of the post-merger representation status for each group by the National Mediation Board, which may require an election where the carriers have different unions or where one carrier’s group is unrepresented
- Negotiation of a joint collective bargaining agreement for each work group covering the combined employees of the two airlines
Until these steps are complete, we will continue to recognize the existing unions and apply the existing collective bargaining agreements. Our current Section 6 negotiations will continue to move forward with all of our unions, although we anticipate that discussions will contemplate the implications of the pending merger as well. With certain groups we may enter into discussions for so-called transition or “fence” agreements, and we may engage in joint bargaining in an effort to reach a joint collective bargaining agreement.
We recognize the importance of working with labor leadership in addressing the important issues which confront us all in this process. Over the next few weeks, I am meeting with the leaders of all of our represented United employee groups to explain the proposed merger and discuss with them how we will move forward together. Following these meetings, we will report back on the process each of our unions will take, and will continue to provide updates on our progress.
We also recognize that you have questions about the proposed merger, and we are committed to providing you with timely information concerning the process. As part of that effort, we have provided below the answers to some frequently asked questions about the impact of the proposed merger. There are many issues that will come up during this process, and we will work to provide the best information available, as we progress toward operational integration.
Sincerely,
Doug McKeen
Senior Vice President – Labor Relations
Important Information For Investors And Stockholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The proposed merger of equals transaction between UAL Corporation ("UAL") and Continental Airlines, Inc. ("Continental") will be submitted to the respective stockholders of UAL and Continental for their consideration. In connection with the proposed transaction, UAL has filed with the Securities and Exchange Commission ("SEC") a registration statement on Form S-4 that includes a preliminary joint proxy statement of Continental and UAL that also constitutes a prospectus of UAL. UAL and Continental also plan to file other documents with the SEC regarding the proposed transaction. UAL AND CONTINENTAL URGE INVESTORS AND SECURITY HOLDERS TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC (INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS) CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and stockholders may obtain free copies of the preliminary joint proxy statement/prospectus and other documents containing important information about UAL and Continental (including the definitive joint proxy statement/prospectus), once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by UAL will be available free of charge on UAL's website at www.united.com or by contacting UAL's Investor Relations Department at (312) 997-8610. Copies of the documents filed with the SEC by Continental will be available free of charge on Continental's website at www.continental.com or by contacting Continental's Investor Relations Department at (713) 324-5152.
UAL, Continental and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of Continental is set forth in its proxy statement for its 2010 annual meeting of stockholders, which was filed with the SEC on April 23, 2010, and the preliminary joint proxy statement/prospectus related to the proposed transaction, which was filed with the SEC on June 25, 2010. Information about the directors and executive officers of UAL is set forth in its proxy statement for its 2010 annual meeting of stockholders, which was filed with the SEC on April 30, 2010, and the preliminary joint proxy statement/prospectus related to the proposed transaction, which was filed with the SEC on June 25, 2010. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation may also be included in the definitive joint proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Continental’s and UAL’s current beliefs, expectations or intentions regarding future events. Words such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Continental's and UAL's expectations with respect to the synergies, costs and other anticipated financial impacts of the proposed transaction; future financial and operating results of the combined company; the combined company's plans, objectives, expectations and intentions with respect to future operations and services; approval of the proposed transaction by stockholders and by governmental regulatory authorities; the satisfaction of the closing conditions to the proposed transaction; the timing of the completion of the proposed transaction; and other factors that are set forth in the "Risk Factors" section, the "Legal Proceedings" section, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section and other sections of UAL's and Continental's Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings. All subsequent written and oral forward-looking statements concerning Continental, UAL, the proposed transaction or other matters and attributable to Continental or UAL or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Neither Continental nor UAL undertakes any obligation to publicly update any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.