If it's a continent, chances are it's accessible via Continental Airlines. The carrier serves about 140 US destinations and another 135 abroad from hubs in Cleveland, Houston, Newark, and Guam (hub of Continental Micronesia). Its network includes regional flights by subsidiary lines. Continental has about 350 jets and more than 250 regional aircraft. It extends its offerings through code-sharing with fellow members of the Star Alliance, led by United Continental's United Air Lines, Lufthansa, and Air Canada. (Code-sharing allows airlines to sell tickets on one another's flights.) In fall 2010 Continental was acquired by United parent UAL Corp. in a $3 billion stock swap to create United Continental Holdings.
The deal transformed Continental and United into sister subsidiaries of the new United Continental (formerly UAL Corp.). United Continental ranks as one of the world's largest air carriers, approximately 8% larger than Delta Air Lines in worldwide traffic, garnering more than a 20% share of the US market. United Continental, led by chairman Glenn Tilton (former chairman and CEO of UAL) and CEO Jeff Smisek (he filled the same seat at Continental), is largely owned by United Continental shareholders (55%), with Continental shareholders holding a 45% stake. Continental retains its logo and branding, as well as its sizeable hub in Houston.
The air carrier combination aims to build market share, as well as cut costs and increase revenues. United and Continental have almost 15 routes that overlap; United adds its strength in Asia/Pacific markets to Continental's presence in Europe and Latin America. Continental flies to about 135 cities that United doesn't serve, and United flies to about 100 cities that Continental doesn't. While passengers benefit from expanded access to destinations, the deal promises to stabilize the US airline industry by reducing capacity and giving all carriers freedom to raise fares.
The merger was spurred, in part, by the acquisition of Northwest by Delta in late 2008. Continental subsequently broke with SkyTeam (which includes Air France, Alitalia, Delta, and KLM) to enlist in the Star Alliance. Continental's membership in the Star Alliance gave it a more prominent role than it had as a SkyTeam member. Continental's move grabbed more of the international revenues (shared among Star Alliance members), as well as gave it a better grip on the lucrative New York City market through its hub in New Jersey.
The airline industry's troubles -- brought on by volatile fuel prices, a sharp drop in travel and freight demand, and the global economic recession -- were another motivation for consolidation. To recoup losses during the economic downturn, Continental implemented fees for extra services, such as checking baggage, to offset the drop in ticket sales. Additionally, Continental has been working to wring costs from its regional operations. After negotiations with former subsidiary ExpressJet for regional service fell apart, Continental scaled back its contract with the carrier and signed up with Chautauqua Airlines, a unit of Republic Airways Holdings, as a second main regional carrier. Both airlines fly as Continental Express.
Champlain Enterprises and Colgan Air also fly about 15 twin-turboprop planes each under the Continental Connection banner. Colgan is adding an additional 15 aircraft through 2011.
With a decrease in domestic demand, the company benefited from growing demand for international travel, where price competition on many routes is less fierce than in the US. The carrier sought and won the right to fly nonstop routes between the US and Shanghai, China. Through its subsidiary Continental Micronesia, the airline leads US carriers in flights to Japan. Through a joint venture with All Nippon Airways, which was approved by both the US Department of Transportation and the Japanese government in late 2010, the carrier will develop more flight schedules between the Americas and Asia. – less