CONTINENTAL, UNITED MERGE AS LARGEST AIRLINE

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Carrier to increase capacity next month

By Frank Whitman HAGÅTÑA, Guam (Marianas Business Journal, Sept. 12, 2011) – Continental Airlines and United Airlines are operating as sister companies under United Continental Holdings Inc. as they complete their merger into the world's largest airline. That process and other airline developments were topics of discussion when the Journal met with Barry Bergmann, managing director of Micronesia and Southeast Asia for United Continental Holdings.

Cape Air, which operates the Continental Connection flights between Guam and Saipan will add a replacement second ATR-42 aircraft to its operations before the end of the year, according to Barry Bergmann, managing director of Micronesia and Southeast Asia for United Continental Holdings. He said the airline has no plans to change its Saipan service.

"We're committed to the Saipan market; we think it's best served by Cape Air," he said. Their second ATR arrives [this year], so when we have a couple of airplanes on that route, we should be OK. There's no change in our commitment to [Saipan]. Considering the market, we think we have the right schedule and the right aircraft for the market and they do pretty well."

Cape Air suspended flights from Sept. 2 to Sept. 5 as its plane underwent repairs. According to Journal sources, about 100 passengers were stranded on Saipan during that time.

The airline is helping Guam tap into the China tourism market, which represents "a great opportunity, and there's a lot of demand," Bergmann said. "United/Continental is planning charter flights from several cities in China to Guam from the fourth quarter of 2011 through the Chinese New Year period in 2012 to meet its increasing Chinese leisure traffic demand."

According to a Guam Visitors Bureau spokesman, one charter flight each arrived on Guam from Beijing, Shanghai and Shenyang during the third quarter of 2011. As of press time, GVB was aware of one flight scheduled to arrive from Beijing and two from Shanghai in October.

According to Journal sources, more than 20 charter flights are scheduled to arrive before the end of the year. The number of China flights is not final, sources said.

The new United will continue to operate Guam as one of its 10 global hubs and will be in a position to bring more traffic into the island and to the region, he said.

Bergmann said the two airlines will continue to be operated separately under United Continental Holdings until the Federal Aviation Administration issues a single operating certificate, likely in November.

The airline has announced that beginning Oct. 30, it will increase its passenger capacity into Guam by about 36 percent as it replaces Continental 767 aircraft with United 777 aircraft on its Guam-Honolulu and Narita-Guam routes. The 777s carry 92 more passengers than the 767s and the change means about 2,000 more seats per week into Guam, according to Bergmann.

The 777s also offer additional cargo space. The 777-200ER has a cargo capacity of 5,330 cubic feet and can hold up to14 LD-3 containers, according to the Boeing website. The 767 has 3,180 cubic feet of cargo space and cannot accommodate the containers.

"Additional cargo capacity will be 30 percent to 40 percent from the current B767," Bergmann said. "This will definitely contribute to our existing business such as food products from the U.S. to Guam and perishable business such as tuna from Micronesia to Japan. Also, this incremental capacity would help to handle more cargo from Asia to the U.S. via Honolulu in peak season when the space from Narita to the U.S. is limited."

The addition of the seats is "a lot all by itself," Bergmann said. "But when you think that those seats are interconnected with these two big networks that were put together - there were only 15 route overlaps - it's amazing some of the combinations you can do and the traffic that we can get to come through here and also to the benefit of the travel out."

The airline will also initiate four-times-weekly Guam-Okinawa service Sept. 28 on a Boeing 737 aircraft. In addition to business from the military between the two destinations, the airline will promote tourism to Guam as well as into Micronesia. Passengers will also pass through the island on their way to Hawaii and other destinations, Bergmann said. "Service members and their families on Okinawa are big divers," he said. "So we look to see a lot of business come not only from the military business, but also from the leisure business to this area, and a lot of other business that goes on to Hawaii."

Bergmann acknowledged concerns expressed by local Continental employees that the merger would negatively impact them, but he said that the situation is temporary, as it will take time for labor agreements to be in place to address the issues.

The flight attendants from the two airlines voted in late June to be represented by the Association of Flight Attendants, which had represented the United Flight Attendants; the Continental flight attendants had been represented by the International Association of Machinists.

"They have one union now," Bergmann said. "That's good progress because now we can start negotiating. The next step after that is that the unions have to merge the seniority lists and come up with one seniority list." In addition, flight attendants from one airline cannot work on the aircraft of the other airline until the single operating certificate is issued. We wish we could do these things overnight, but they take time," he said.

The airline has no plans to change its route schedule in the Micronesia region other than the previously announced Sept. 25 termination of the "mini-hopper" stop in Majuro, Bergmann said. He emphasized the potentially positive impact of the region's connection to the expanded network.

Bergmann declined to speculate on the likelihood of a direct flight between Guam and the U.S. mainland, but responded to the question with an anecdote of a United meeting in Chicago at which an airline scheduler was addressing attendees. "[The scheduler] said, 'This merger was like waking up on Christmas morning and seeing all these airplanes under the Christmas tree and all the possibilities of the schedule,'" he said. "I think there are many, many possibilities of what could happen."

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