United's Tilton tells Congress parts of O'Hare expansion still worth pursuing
By: Paul Merrion June 16, 2010
(Crain's) — United Airlines backs completion of the final three runway projects planned at O'Hare International Airport, Chairman and CEO Glenn Tilton said Wednesday.
But the Chicago-based carrier continues to view other key pieces of the O'Hare Modernization Program — namely, a new western terminal and other terminal expansions — as "perhaps no longer necessary" in today's economy, he added.
Mr. Tilton was pressed on United's commitment to O'Hare expansion at a congressional hearing on the carrier's proposed merger with Continental Airlines.
"This is very positive," Rep. Dan Lipinski said in an interview outside the hearing room. "This is very good news for OMP."
The Chicago Democrat asked Mr. Tilton at the hearing if United would commit to complete O'Hare expansion after the merger.
United and American Airlines, the two major carriers at O'Hare, supported the first phase of improvements that are now nearing completion, but negotiations with the city to proceed with the second phase have bogged down over the last year.
Absent airline approval, the city has used federal passenger facility charge revenue to pursue design and engineering work on OMP's second phase.
"Given the economic circumstances we now face, United thinks those runways are justifiable," Mr. Tilton said at the hearing.
The remaining three runway projects are slated to cost about $3 billion, according to a Lipinski aide.
Mr. Tilton and his Continental counterpart, Jeff Smisek, received a frosty reception from the House of Representatives aviation subcommittee, and faced the sharpest public questioning yet on specifics of the deal.
"I will continue to vigorously oppose it," said Representative James Oberstar, the chairman of the full Transportation Committee who says the deal will harm competition, raise fares and reduce choice for consumers.
Representative Dennis Kucinich of Ohio, which could be vulnerable to job and service cuts as a result of the merger, said his subcommittee, the domestic policy panel, would investigate Continental 's marketing alliance with United , approved by regulators in 2009.
Tilton was questioned closely on pilot training of overseas alliance partners and had a sharp exchange over outsourcing heavy maintenance on some aircraft to China under an agreement with Germany's Lufthansa.
But Smisek was grilled on safety following the February 2009 midair stall and crash of a plane operated by regional partner Colgan Air near Buffalo that killed 49 people. Family members of some of the victims of Flight 3407 attended the hearing.
Smisek called the crash tragic and regrettable, and said Continental was not aware that the pilots of the ill-fated aircraft were undertrained, as crash investigators concluded.
Tilton and Smisek said the merger was necessary for the two airlines to compete effectively with global airlines like American Airlines, Delta Air Lines and Air France-KLM.
If the deal is approved by antitrust officials at the Justice Department, United / Continental operating as new United , would join Delta, which merged with Northwest in 2008, and American as the three largest domestic carriers. They would hold a combined 35 percent share of the market and new United would command about half of that.
On pensions, Smisek said the current retirement system for Continental employees will remain after the merger. Additionally, Tilton said United employees will not see a return of retirement plans that were terminated and assumed by U.S. pension insurers during the carrier's bankruptcy.
United and Continental pledge minimal job losses among the combined company's 90,000 workers.
Both carriers are trying to negotiate contracts with their respective pilots' unions before the end of the year, the time-frame they have set to win government approval of their deal.
(Reuters contributed to this report.)
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