United and Continental to announce merger

As we, and half of the airline reporters, have posited, Continental and United Airlines are getting ready to announce their engagement. It happened quickly as we suggested it might in an earlier column. These two airlines had already tried each other on for size about two years ago.

It didn’t work back then, but times change, situations change and CEOs change. To be honest, I still don’t buy into the bigger is better argument. I certainly don’t buy into the one good airline plus a bad airline creates a better airline.

Frequent fliers aren’t going to get that much of a benefit, since these two have already married their frequent flier programs to a degree through alliance membership.

Route structures will shift around, but no giant shifts or closures of hubs are envisioned going forward. Of course, there is a question about what the heck Continental will do with its Cleveland hub.

Customer service at United can only improve. Bringing it back to a U.S.-based operation, merged with Continental’s, may help.

The biggest problem with this merger will be bringing the people together. Unfortunately, I foresee a giant problem that will affect service for a long time. And I’m not even talking about the messy business of merging union seniority lists.

From a United employee’s point of view, this deal has all upside potential. Continental’s workers are going to take it in the shorts.

• There will be thousands of more job losses at Continental than at United since United has already been cut to the bone.

• The Continental pension program will be slowly gutted (maybe no so slowly) and replaced with a less-generous arrangement.

Continental workers last week received a letter (ominous on its timing) about their pension programs explaining “financial status to participants.” The letter offered an option for employees (or retirees) to go online and “request your current accrued benefit estimate” — previously this information was not readily available. It also included a section on “Rules governing termination of single-employer plans.”

• If the headquarters moves to Chicago, as rumored, more Continental workers and executives will be uprooted and forced to move.

Then there is the problem of merging a workforce with a high morale (Continental) together with one that has hit rock bottom (United). I am afraid that the above developments will only serve to dispirit Continental workers.

United Airlines had bad management/employee ratings. It earned a 2.0 rating from its “dissatisfied” employees on Glassdoor.com that tracks employee sentiment. Continental is rated almost twice as high at a 3.9 rating. Plus, employees are “satisfied” and voted their company one of the best places to work in the country.

Browsing comments on bulletin boards and other sites from the past few months, finds positive comments from Continental workers like:

… a small company feel, really cares about their employees.

We are best of the major carriers.

We have a great culture of taking care of our people.

Good health and retirement benefits.

…an absolutely fantastic corporate culture.

Comments from United workers are from another world. (About the only good comments found were that their jobs offer travel benefits.)

An unbelievable adversarial management style!

Employees have a tendency to feel unheard.

Totally unfair employee evaluation and advancement process.

Some flight attendants are bitter and do no enjoy working there anymore.

Morale is down among all work groups, pilots, mechanics, agents, flight attendants, supervisors, etc.

It doesn’t take rocket scientists to figure out that the cozy Continental workplace is going to be rocked by this news.

Heck, Delta and Northwest managed to merge their disparate cultures, but along the way, Delta that was once known for top-notch customer service is now, after the merger, mired in last place in DOT’s quality ratings.

Larry Kellner must be fuming.