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The Financial State of the Airline Industry and the Implications of Consolidation

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The Financial State of the Airline Industry and the Implications of Consolidation S. HRG. 111–1061 THE FINANCIAL STATE OF THE AIRLINE INDUSTRY AND THE IMPLICATIONS OF CONSOLIDATION HEARING BEFORE THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION JUNE 17, 2010 Printed for the use of the Committee on Commerce, Science, and Transportation ( U.S. GOVERNMENT PRINTING OFFICE 68–174 PDF WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 13:36 Sep 09, 2011 Jkt 068174 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\GPO\DOCS\68174.TXT SCOM1 PsN: JACKIE SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION JOHN D. ROCKEFELLER IV, West Virginia, Chairman DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas, Ranking JOHN F. KERRY, Massachusetts OLYMPIA J. SNOWE, Maine BYRON L. DORGAN, North Dakota JOHN ENSIGN, Nevada BARBARA BOXER, California JIM DEMINT, South Carolina BILL NELSON, Florida JOHN THUNE, South Dakota MARIA CANTWELL, Washington ROGER F. WICKER, Mississippi FRANK R. LAUTENBERG, New Jersey GEORGE S. LEMIEUX, Florida MARK PRYOR, Arkansas JOHNNY ISAKSON, Georgia CLAIRE MCCASKILL, Missouri DAVID VITTER, Louisiana AMY KLOBUCHAR, Minnesota SAM BROWNBACK, Kansas TOM UDALL, New Mexico MIKE JOHANNS, Nebraska MARK WARNER, Virginia MARK BEGICH, Alaska ELLEN L. DONESKI, Staff Director JAMES REID, Deputy Staff Director BRUCE H. ANDREWS, General Counsel ANN BEGEMAN, Republican Staff Director BRIAN M. HENDRICKS, Republican General Counsel NICK ROSSI, Republican Chief Counsel (II) VerDate Nov 24 2008 13:36 Sep 09, 2011 Jkt 068174 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\68174.TXT SCOM1 PsN: JACKIE C O N T E N T S Page Hearing held on June 17, 2010 ............................................................................... 1 Statement of Senator Rockefeller ........................................................................... 1 Prepared statement .......................................................................................... 1 Statement of Senator Hutchison ............................................................................ 31 Prepared statement .......................................................................................... 32 Statement of Senator Dorgan ................................................................................. 33 Statement of Senator Johanns ............................................................................... 36 Statement of Senator Lautenberg .......................................................................... 43 WITNESSES Hon. Susan L. Kurland, Assistant Secretary for Aviation and International Affairs, U.S. Department of Transportation ...................................................... 2 Prepared statement .......................................................................................... 3 Glenn F. Tilton, Chairman, President and CEO, UAL Corp. .............................. 5 Joint prepared statement of Glenn F. Tilton, Chairman, President and CEO, UAL Corp. and Jeffery A. Smisek, Chairman, President and CEO, Continental Airlines, Inc. ................................................................... 7 Jeffery A. Smisek, Chairman, President and CEO, Continental Airlines, Inc. .. 14 Robert Roach, Jr., General Vice President, International Association of Ma- chinists and Aerospace Workers ......................................................................... 15 Prepared statement .......................................................................................... 17 Charles Leocha, Director, Consumer Travel Alliance ........................................... 23 Prepared statement .......................................................................................... 24 Daniel McKenzie, Senior Research Analyst, Hudson Securities ......................... 28 Prepared statement .......................................................................................... 30 APPENDIX Hon. John Thune, U.S. Senator from South Dakota, prepared statement ......... 59 Susan Fleming, Director, Physical Infrastructure Issues, U.S. Government Accountability Office, prepared statement ......................................................... 59 David Cush, President and CEO, Virgin America Inc., prepared statement ..... 71 Patricia A. Friend, International President, Association of Flight Attendants CWA, AFL–CIO, prepared statement ................................................................. 75 Response to written questions submitted to Hon. Susan L. Kurland by: Hon. John D. Rockefeller IV ............................................................................ 79 Hon. Barbara Boxer ......................................................................................... 79 Hon. Frank R. Lautenberg ............................................................................... 80 Hon. Mark Pryor ............................................................................................... 80 Hon. Mark Warner ........................................................................................... 81 Hon. John Thune .............................................................................................. 81 Response to written questions submitted to Glenn F. Tilton by: Hon. John D. Rockefeller IV ............................................................................ 82 Hon. Barbara Boxer ......................................................................................... 82 Hon. Frank R. Lautenberg ............................................................................... 83 Hon. Mark Pryor ............................................................................................... 83 Hon. Amy Klobuchar ........................................................................................ 85 Hon. Mark Warner ........................................................................................... 85 Response to written question submitted to Jeffery A. Smisek by: Hon. John D. Rockefeller IV ............................................................................ 86 Hon. Barbara Boxer ......................................................................................... 86 Hon. Frank R. Lautenberg ............................................................................... 87 Hon. Mark Pryor ............................................................................................... 87 Hon. Amy Klobuchar ........................................................................................ 89 (III) VerDate Nov 24 2008 13:36 Sep 09, 2011 Jkt 068174 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\68174.TXT SCOM1 PsN: JACKIE IV Page Response to written question submitted to Jeffery A. Smisek by—Continued Hon. Mark Warner ........................................................................................... 89 Response to written questions submitted by Hon. John Thune to Glenn F. Tilton and Jeffery A. Smisek ............................................................................... 91 Response to written questions submitted to Robert Roach, Jr. by: Hon. John D. Rockefeller IV ............................................................................ 92 Hon. Mark Pryor ............................................................................................... 93 Hon. John Thune .............................................................................................. 93 Response to written question submitted to Charles Leocha by: Hon. Frank R. Lautenberg ............................................................................... 94 Hon. Mark Pryor ............................................................................................... 94 Hon. Mark Warner ........................................................................................... 94 Hon. John Thune .............................................................................................. 95 Response to written question submitted to Daniel McKenzie by: Hon. Frank R. Lautenberg ............................................................................... 95 Hon. Mark Warner ........................................................................................... 95 Hon. John Thune .............................................................................................. 96 VerDate Nov 24 2008 13:36 Sep 09, 2011 Jkt 068174 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\68174.TXT SCOM1 PsN: JACKIE THE FINANCIAL STATE OF THE AIRLINE INDUSTRY AND THE IMPLICATIONS OF CONSOLIDATION THURSDAY, JUNE 17, 2010 U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. The Committee met, pursuant to notice, at 10 a.m. in Room SR– 253, Russell Senate Office Building, Hon. John D. Rockefeller IV, Chairman of the Committee, presiding. OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, U.S. SENATOR FROM WEST VIRGINIA The CHAIRMAN. Good morning, everybody. This hearing is begun. And we have a full quorum, so we will proceed. Kay Bailey Hutchison is with constituents, and she’s on her way. She’s a very, very good person to work with. Let me make my opening statement, then Kay Bailey hopefully will be here by that time, and then we will go to each of you. We have some time pressure this morning, because we have a— you’ve already been canceled
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