With their labor agreements about to expire, Continental's employees opposed the takeover bid. When the takeover was completed the following year, Lorenzo merged Texas International, another Texas Air affiliate, with Continental. Labor problems threatened the new airline, and Continental shortly filed for reorganization under Chapter 11 of the bankruptcy code. Lorenzo resumed operations with the workers still on strike and succeeded in defeating the unions. Continental moved its corporate headquarters to Houston in and, pursuing a strategy of low fares and hiring nonunion employees, worked its way out of bankruptcy by In Continental made 1, flights daily, and served cities as the nation's third-largest carrier.
In spite of their dramatic expansion, Texas Air and Continental once again faced hard times in the late s. Rising fuel prices and declining passenger traffic led to heavy losses in and Part of Eastern Airlines was sold to Donald Trump in , and the remainder of Eastern went into bankruptcy in and liquidation in Frank Lorenzo left Texas Air in When Eastern airlines went into bankruptcy and was removed from the control of Texas Air, Texas Air was renamed Continental Airlines Holdings in , to reflect its primary remaining air operation.
Continental was purchased by Air Canada in and emerged from bankruptcy the following year. In Continental's airplanes served United States cities and fifty-seven foreign cities. By this time the airline was once again facing bankruptcy along with a disgruntled workforce and poor ratings for customer service. Bethune initiated his "Go Forward" plan that created incentives for employee performance in the effort to improve work efficiency and customer satisfaction.
During his ten-years' tenure, Bethune was credited with the dramatic turnaround of Continental Airlines, which garnered the new reputation as a top-ranking carrier in customer service as well as employee morale. After the deal was announced shares of both firms rose in morning trading in New York. United's parent UAL Corporation saw its shares rise by 51 cents, or 2.
Although United is seen as the dominant partner, the merger was described as "a merger of equals". Together United and Continental currently fly to destinations worldwide, flying million passengers a year. Combining the two companies will create the world's biggest airline, based on the total number of passenger-miles flown.
Continental's boss Jeff Smisek will be chief executive of the new company based in Chicago, while United Airlines' Glenn Tilton will serve as the non-executive chairman. Mr Tilton called the deal "great The companies did not give any details on potential job cuts, but said they expected front-line employees to be "minimally affected by the merger", with staff reductions coming from retirements and voluntary redundancy. The two companies currently employ a total of 86, people.
Analysts expect redundancies to form part of the merger, with airlines anxious to cut costs following a recent collapse in profits within the industry.
Chief executive Jeff Sismek said some cost-savings would come from getting the most out of aircraft and sharing IT services. They also hope that the better choice of routes will be attractive to sought-after business customers. Both companies are full-service airlines and have faced intense competition from low-cost operators. Last month British Airways and Iberia followed the consolidation trend, merging to create one of Europe's largest carriers.
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