to do in securing our borders is keep dangerous goods and people out. there is noosingle silver bullet for that purpose. there is no daisy chain. the federal government playing its role and responsibility, yes. it is a constant challenge. you're never done securing your border. .

that may have an interactive way of managing what they have to do in the event of a crisis. we have nine persons response, which is a key element which really inhibits the kind of crosscourt nation in assets. we have made some progress but not enough. municipalities have strong preferences in this regard. we are committed to the interoperability agenda and we will continue to work on that because it is so fundamental to the response. the department of homeland to charity is not the first responder. very often the first responders are not even local authorities. we know that this is where the work is ddne, that this is the

front line. we need to do our part to strengthen its and better interoperability. >> yellow shirt? >> good morning, i am yellow shirt. my name is maurice. a propos your statement on the committee, do you think it would be wise to break up this department? you have an enormous bureaucracy here, meaning, that which has to do absolutely with national security, and fema, hurricanes, floods, things like

that, and i wonder if it winter be better to be in different agencies? >> no. traveling around for theof life- military. now i am at a homeland security department. fema is better off where it is located wwth the coast guard. the secret service is better off with its code location of the other assets. that issue is resolved. >> agd international. you talk about stopping terror into the -- incidents. have you considered wanting

programs to stop the training for these kinds of ducks? khalid sheikh mohammed, it is his trial going to take place in exposing information to others? >> also believe that last part for the department of justice. the federal government does engaged internationally with the muslim world. the president's speech in cairo was ever bite -- resounding statement of the president's view of things. we have all been working consistently with and not be you. here.ve a particular challenge%- the muslim community that exist in this country brings a richness to our society, a

commitment to the american way of life that we share. we also know there are larger+ communities within these communities, and they all have to engage. we do not believe, again, that this is a problem thht you can simply arrest your way out of the. it has to be built on the engagement, putting in place the structural elements of a capable society, a market economic activity, robust economy. all of the things we know and are committed to in this country. we need to remind ourselves it is available to all american citizens and in less their help. that is our concern. >> over here. >> good morning.

homeland security. gene asked earlier about other tools you might need to fight the war on terror -- >> are going to leave this to go live to the omni shoreham hotel+ jim messina on the elections. later on, we will hear from van jones, foonder of green for all, on what he sees as the need for a clean economy. can this progress works with young people to host a variety of issues. he has overseen and consulteddon political campaigns across the country from alaska to new york. he is a graduate from the university of montana. thank you again for coming. >> my pleasure. >> we have lots of young peoppe in the room, young people

getting started on their political career. what is it like working in the white house? >> it is like a dream every day. it is as cool as you think it is. [laughter] you spend your whole life getting one of these comes that you wanted. i remember when he called me. he said, messina, do you want to change the world? i thought that was a perfect way to describe my job. >> in the first 16 months, what has been the biggest challenge? >> i would say health care. there is a reason why it took 70 years, so many presidents. it is the hardest thing i have when i die, i know that i will be part of thissamazing thing, giving health care to millions

of americans who did not have it. it will be a crowning achievement for both the president and all of us who worked on it. >> i know it felt like forever, especially for some of the number advocates. can you relive the moment for us when it passed, what was happening in office? >> i can do one better. we stayed up the night before in the house to negotiate to get the final votes. i went to the president -- i will never forget this. he was playing basketball in his suit with reggie. he ran over to me and put the ball down in front of me and said, after seven years of trying, we are going to pass health care in the united states. he gave me a big hug and fist bump. [laughter]

he leaned over and said the most true thing. i told you so. [laughter] that moment, we knew that it would pass. the next day went very quickly. when you spend time working with someone, you get to know them better than anyone. after working with him for 18 months, he is the leader that you all wanted him to be. time and time again, people said is politically too hard. the president said over and over that we are going to do this because it is the right thing. we got it done. [applause] >> i know one of the central thing that you just said is that you did fist bump the president. can you say truthfully that you are a fist bumper previous to

meeting the president or post- administration? >> i am a recent convert. >> that is the sign of a good staff. in the same vein, how would you counter it -- portray working in the white house to the tv portrayal of "the west wing?" >> we curse more. [laughter] we are better looking. [laughter] i am indiana kit from montana. every day, i drive my car into the gate of the west wing, and i think, only in america can you go from montana to the west wing. i think there is a difference working, compared to all of my other jobs.

things happen that you never expect. the challenges that this president has had are just monumental. when you work on the hill, you do not have those issues. >> knowing that there are a ton of the issues constantly coming up, how long does a typical day go for you? >> i am in the office by 7:00 a.m. every morning. at 7:30 we have a gentle morning rahm meetinn where he is always calm, placid. then we have another meeting at 9:30. then we meet with the senior advisers. i try to leave by 9:00 and be in

bed by 11:00. >> what has been your longest day so far? >> the story i like to tell about how weird this job is.3 was watching robert gibbs in his daily press briefing. that day, someone decided to fly air force one past the statue of liberty. it scared a lot of people in new york. i was watching him give questions about that, and i thought, it sucks to beat him. and then i heard, the president has appointed jim messina to deal with the matter. i said, excuse me? [laughter] >> why do yoo believe this administration has accomplished, thus far, -- i know you talked about health care -- but things

that will benefit young people? >> we have had some of the most significant student loan reforms. that will give you better access to grants. contained in the bill will be contiiue to have the best higher education system in the world. as well, this allows you to stay on your parents' health care bill until you are 26. you can go into public service -- [applause] you have a lot more options know when you have health insurance. i took six and a half years to get through college. i kept leaving to work on campaigns were other progressive organizations no one had ever heard of. sometimes i had health insurance, sometimes i did ot.

when i got my degree, i was ready to have this career. part of that process was getting a great educction. not all of you can go to the university of montana, but if you could, it is the best school in the world with the best football team. but it did prepare me to be a young organizer. >> i must reserve my personal feelings and affiliations, so i am agreeing with you, because of my current position, but i will say that theeuniversity of miami might be the best. as a community of young activists, we have spent a lot of time on key issues like college affordability, health care reform. there are three key issues that a lot of people in this room, young peopleearound the

country, would like to see a lot more progress on. i am interestee to see how the adminiitration plans to make progress on each of the following. on immigration reform -- >> the president gave a major national address of laying out a way forward on immigration reform. about. it is something that we are workkng strongly on with border security. we are looking to give the immigrants in the country a way to pay their taxes, a way to serve their country and move forward to a path of citizenship, while securing our borderss we have taken a real steps on the border, there is more work to be done, but all of that needs to be done in a comprehensive immigration from work. we are continuing to work with the house and senate to move on

this legislation. >> climate change. >> an issue near and dear to my heart. last week, the president and i had 21 members of the senate in. energy research -- reform legislation passed the house last year. now we are working hard to get it through the senate, working with members of both parties to figure out a way forward on this piece of legislation. you all are about to enter the job force. one of the best ways to help you create jobs is through a clean, sustainable energy future, which is an economic and national security priority for the president. we can pass hundreds of millions of jobs by passing this bill. that is what the president will do. >> last but not least, lgbt

rights. >> this issue was given to me by the president. we have mmde more progress on these issues than any other president in history. the president sattin the east room and signed the matthew shepherd hate crime bill into law. that bill took 17 years to get through. the president took care of it in one year. don't ask, don't tell it is next on the agenda. -pa senate armed services committee passed that, and we're hoping that the bill will move through the senate, and we are hoping that it will end up on the president's desk so that we can end don't ask, don't ttll. [applause]

>> you come from many years on the hill. how would you compare working in the white house to working on >> security is a lot worse. [laughter] whenever you do public service -- i say this all the time. public service is one of the best things you can do. it can be a lot of different things. every day, i get to go to work and make millions of people of lives etter. i have a picture of my family and my dog on my desk. those are the people that i am working for every day. do that in the west wing, then i did on the hill. that is a privilege. but the challenges are real. what the president said in the campaign is true. change is really hard. there are always reasons not to

change. what you are doing is huge. you could be doing 10 different things, but you are here talking about ways to make people's lives better. what you will do to help this president will truly change the country, change the world. we all have a responsibility to do that, so i think you -- thank you. >> those are definitely inspirational words, but i know for a lot of people currently working on the hill, it is a lot of answering phones, stapling paper. how do you inspire people that are truly looking to be in public service?

what is your piece of advice to be successffl? >> all that matters in life is getting things done, making progress. that is why we are here, right? i was an intern on capital, like many of you come up for a nonprofit company. first to get there in the morning and the last to leave. 17 years later, i am still one of the first in the best winning and one of the laat to leave. they re stupid enough to pay me to do this job. [laughter] i would just say, keep at it. see what you want next and go after it. it takes everyone to get something done. why did it take several decades to get health care? these things are heard.

climate change? you cannot just get off intense said, iijust have to make copies. somebody has to do that. in your next job, you might be doing something else, you might be jim messina. i was a kid that came from montana, i put myself through school, but now i get to drive a cool car and work for the president. [applause] >> i think also, especially in a down market, why we choose these drums. you mentioned you took six years to get through undergraduate. how was your mom doing in that time? >> she was not pain, so it did not matter. [laughter]

just like all of you, sheelooked at me and said, he is happy, he has passion. as long as he is happy. i think she'd got it when she went to my job at capitol hill and said, wow, you are not a slacker. the single most important thing love. if you do not love it, do not do it. it does not mean that you will love making copies or answering the phone, but working for people that you are passionate about, it will make you motivated. if you like making cupcakes, go and make cupcakes. i wanted to be the star quarterback of the denver broncos, but that did not work,

so i went to work to camping -- on campaigns. >> who do you look to to be motivated? who are your role models? >> i would say two. first is my mother. single mother raising a family, toughest woman i have ever met. give it up for mom. [applause] you think this is a political entered, but it is not. the president. i see how hard it is to be the president in 2010, i see how hard he works at it, how hard he works to make the right decision, how much he has gotten done in the first 18 months, and i could not be proper of him. and he is taking me to vegas tomorrow. [laughter]

>> it was a pleasure to speak to you. thank you. everyone join me in thanking jim messina. [applause] >> andrea gibson. >> hello, everybody. years ago, i was reading a book. i read it is a fact, that right now if you were to press your hard against mine, but eventually, our hearts wwth start beating at the same time. we are that powerful. i read that in the same place that i've read, when two violins are placed in the rrom, if a court on one island is struck, that sound will be in the other one. we can sound of music and people around us simply by playing our own strengths.

you and your fingers are ready. the time you master the parts, for the time that you give yourself to someone else. the steeples ballot to the sky. this is for you. this is also for the people who wake up early to watch the flores sleep. for the mothers wwo feed their children first and thirst for nothing when they are full. there were men who cried, then who bleed from women's mood. for the people who cut her loose. for the people waiting to learn. this is for the man who showed me the hardest thing about having nothing is having nothing to give. the only reason to live is to

give ourselves the way. this is the day we will quit our jobs and work for something real. this is for the people who run other cages at slave wages built. right now, we are beginning sound that sounds something like people bring their porch lights on and calling the homeless back home. this is for falling from grace this is for your grandmother who walked 1,000 miles on broken glass to find that single patch of grass to plan the family tree. for the ones who know the mask of war has always been such directions, plan lived, when you give like every start pushing on you. this is for the time you went through hell when someone else

did not have to. for the time you talk a 14-year- old boy he was beautiful. for he rascal anarchists. what are the chances of anyone moving from right to left if we only see nbc and cbs? for fear of saying i love you to people who will never say it to us. remembering to shine. for the many beautiful things that we do come up for every song we have ever song. for refusing to believe in miracles because that miracles or the impossible coming true when everything is possible. tonight, saturn is on its knees, proposing with all of its 10,000 rings, but we stand even more the world need us more than it has ever needed us before. pull every string, play every

chord. if y are writing letters to prisoners, a pair down the bars. never go a second hushing the percussion of your heart. play loud. you are the last chance for something. play like there is no time. you have a drum. you have a song like a breath that could raise as like the sunrise. play like you know we will not survive if you do not. but we will if you do. play like saturn is on its knees, proposing with all of the 10,000 rings that we give our every breath. this is for saying yes. this is for saying yes. [applause] thank you. thank you very much.

but not. [applause] i read a happy one first, that may have been a bad idea. here we go. i wrote this poem many years ago in this city. when i wrote it, i had no idea that i would be reading it as long as i have been. i hope to stop reading it soon. >> the light ccme back from iraq and tattooed a teddy bear on the inside of his wrist. above that, in medical with an ivy bed, above that, the angel. eli said that the teddy bear will not live. he is only 24 but i have never seen is further away fromm childhood as his. eei's mother traces a teddy bear on the inside of my arm and says

not all casualties come home in body bags. if i could find a fucking tunnel, i would write white flags, somebody please pray for the soldiers. how ironic that their death sounds like a bible versus? 100,000 slain, npt on the third floor. forget-me-nots on the windowpane. and our sky is so perfectly blew, it is propulsive. somebody tell me where god and lives. if god is truth, god does not live here. there are ghost of kids who are three parked stars, and shewith

swears she can feel his photographs bbrned. how many wars will it take us to learn that only the dead are there? the mortar of sanity crumbling. stumbling back home to a home that will never be home again. eli does not know if he can write a poem again. one-third of the homeless men in this country are veterans. we have pretty yellow ribbons but nothing but dirty looks to their outstretched hands. each flight, a promise we never kept. he came back from iraq and hung himself in his parents' basement with a garden hose. he spent 45 minutes the night

before rocking on his father's lap. they're watching him burn and hoarding the water. no senator daughters are looking ashes from their lips or dreaming up ropes that will wrap around their necks. i was are closed, america. you want to support our troops? bring them home and hold them tight when they get here. [applause] its best to please ap up, i was going to read one more poem, and it was going to be ultra queer, but i think this is telling me to wrap up. ok, i am doing it. without being gay.

>> i do ido do i do ding dong dang i do but the fuckers say we can't because i am a girl and you are a girl. i want church bells come on one rosary beads. i want to walk down the aisle north carolina the patriarchy smile. that is not true. but i do want to spend my life with you. 50 years from now when you are getting ready to die, when there are visiting hours for family members only, i want to know that i can go in. i remember when you held my hand saying, baby, flow to me. i have watched you grow.

from the day i said by me a ring that will turn my finger green so i can imagine our love is a forest, i want to get lost in you. i swear, i grew like a wild fire -- while the floor every day for those 50 years.3 maybe you can take a fucking jokk. that night i slept on the couch, but in the morning, we were laughing. for 50 years, you were my favvrite poem. i read you every night, not knowing all the words, but that was ok. this kind of love have to be favored. if we do, it will be a masterpiece. and we were. you said fear it is only a burke only if you let it, but do not

let go of my hand. that was my favorite line. we both broke down crying what are the chances we see anything but corn in kansas? we were born again that day. i cut your court, and you cut mind. the news of hate listening, listening from years f people like you are not welcome here. people llke you cannot adopt. we had lots of cats and dogs. you were crazy like that. i was so crazy about you, i could not go to sleep, waiting for you to come home.. my breath turned silver the day you're here did, like a mirror gold on an island. when they bloomed, the first time i saw you dance in her living room.3 together.

days strong and sang at high tide. you would fold our loved into an origami firefly and pass it through all of my in chambers. my heart is open because of you, because of us. so i do, i do, i do want to be in that room with you with you in family hours. i want to be with you while i sing to you i am so in love with you baby i am so in love with you ding dong ding goodbye. thank you so much. [applause] >> please welcome natasha

bidener. >> hello. i am here from the university of california santa barbara, representing the environmental affairs board. it is my great honor to introduce today another environmentalist from california, a globally recognized leading voice on human rights issues and a green economy. he is the founder of three+ successful nonprofit organizations, including the ella baker center for human rights, which deals with problems of the incarceration in this country. he is also a best-selling author on the green economy. his name is van jones. after he gives his speech, there will be a chance for q&a. you can either text or tweet

your questions to campus progress or we have a micrrphone over there. please join me in giving a warm welcome to van joness [applause] host: hello! -- >> hello! how about a round of applause of applausepoet. unbelievable.oet. it is great to be here with you. the generation that saved us in p000, no doubt, the generation that will save us in 2010. generation obama. [applause] the last time i was here, i was a white house official. now i am not. that sucks!

[laaghter] i want to talk to you about the. [laughter] i am like the rest of america. these are the ddas of hope and heartbreak. how many other americans, that you are fighting for, just got their dream home, literally juut got it, and then lost it. or they just got a promotion, worked hard for, suffered so long to get, and then the company shut down. how many of your peers work theer way through high school, got all the grades, but at the end of the day, could not go to college because student loans were not in place. how many of your cooleagues,

neighbors, roudly joined the military and are now coming back home to an economy with no job and no place for them. these are the days of hope and heartbreak. many of you here, although you look cute, you have a big smile, you are networking, some of you too much -- [laughter] you have some hurt in you, the successes and might give you the confidence, but it ii the setbacks that give you character. we need this generation, in particular, to be a generation of confidence and character. you are the generation in 2008 that put the country on your back and carried it out of an eight-year health of despair, and you got us cross the finish

line because you were willing to take a chance. he took us from despair toohope, which is hard, but now you have to take us from hope to channe. that is harder. anyone here who has ever tried to lose weight knows what i'm talkiig about. [laughter] you know you are 15 pounds overweight and you still a that donut today? that is called despair. [laughter] then you see a fitness magazine, see somebody on the video, and they have this svelte body, the six pack, the tricep, and you say to yourself, i could look like that. that is called hope.

actually losing the 15 pounds, that is called the change. and thht is tougher. you go up and down, back and forth. every day it is not a good day, but if you do not stand for real change now, if you do not say, we meant it, we voted for change, we will never have changed in this country. i was born in 1968, the year they assassinated hope. they killed martin luther king, they killed bobby kennedy. for 40 years we had no hope in the country. hope wassjust a marginal thing. the politics of hope was murdered in 1968 and it took 40 years for you to bring it back. we cannot afford to let it die now. you cannot do that to america. you cannot do that to our country.

as long as you do not go back to despair and cynicism, and all those things that people want to pull you back to now because we did not get everything done in 18 months, as long as you people alive, change is possible. we need a real change and we will not have it unless you stand for it. one of the most important areas where we need a change is in our energy system. that is one of the most important changes. as a generation, you can say to america, it is your plan and that is on the line. part of the challenge that we have right now is we have an economy that is fueled by an energy systee based on death. what is oil but the ancient bbood of our ancestors on the ground that we ig up and burned with no ceremony? what is coal but broken bone

oo our ancestors and burn in our power plants without ceremony. we take death out of the ground and use it to power our society. well noowonder, yoo are now going to get death from the sky, and now ww are going to have death in the ocean because we have a ssciety that is addicted on an oil-based system. and we are pushing our oil workers to drill deeper, risk your lives, blow up your grandmothers mountain. keep on power in america the same way. go into the ocean, risk your lives to drill deeper and deeper so that we can keep power wing america in the same way. you have a responsibility to stand up and tell the people who run this country that america's

future is not down those holes. if you want to see the future, look up. look at the sun. look at the solar power p could have been the country. if you want to see the future, look up. look at the sky, the wind. imagine the wind turbines that can be created in indiana, michigan, ohio, where industrial workers are sitting idle. imaginn them going back to work tomorrow, turning ourrrust belt into a green belt, where they can build the smart batteries, solar panels, wind turbines, and we power america. we can have wind turbines windfarms in america, not just in the plains states, but near the great lakes, off the coast. if we had wind turbines off the coast -- i have never heard of a wind farm collappe creating a

farmwind slick!wind slick or a . that is real change. when you say you want your country to go from being a world leader in environmental pollution, to a world leader in environmental solutions, that is a change. you cannot be afraid to call for that kind of change. if you do noo, nobody else will. the people who have a lock on politics will continue to give us partial solutions that are acceptable to the political status quo but totally unacceptable to the ecological reality that you have to live in. so do not back down now when you need to the most -- when we need you the most. do not be afraid to put your demand in the languageeof

patriotism and love for your country. you can say to anybody, whatever party you are in, that when you were aakid, they taughh you a song. that song was "america the beautiful." you did not see them as a song, just as something your third grader would sing. that song is a charge, a set of orders for everyone who loves the country, to defend america's duty against the clear cutters, the strip miners, the il spellers. do not say you are an environmennalist, say you are a patriot that is sticking up ffr the country and it is willing to defend ii. when you were a little kid, they made you say the pledge of allegiance. you did not take that as just some little thing, you took it

seriously. when my kids say liberty and justice for all, i want them to3 iiwant to support a generation that means it. it is not liberty and justice for all, except for the immigrants and newcomers, those the people. liberty and justice for all. we will fight to the death to get that. we are not going to back down from that. [applause] we have ancestors that spilled their blood on the ground so that women could vote, so that people of color could vote. we have people fighting right now overseas trying to stick up for the best for human families. about those values.

you can blog and say that you do not like it, but that is not what dr. king, with bobby kennedy went through. as a generation, you have an opportunity and obligatton to fight for real change. if the country sees you fighting for real change, the country will not give up hope. you have the opportunity. you have the obligation to pull america back to the other -- to put america back to work with new economics. if you do that, if you accept that responsibility as a generation and cannot put it up to the next generation, if you stand up and own that as your agenda, then we will get a chance to see, just as we did in 2008, the best of america flowering. -pwe can have that, not just on

one day. you have an obligation to build a movement that does not happen on just one day. everything you believe, capabilitiis of technology, your family and love and support, we have a generation that can help america win every day. do not accept anything less. thank you very much. [applause] >> at this time, if you want o line up at this podium over here, if you have questions, we will take somm questions now. >> my name is victor.

my question for you is about green jobs. will the jobs created for a clean energy economy be significant enough to bring relief to our current economic situation? >> yes, and i will tell you why. first of all, many of us do not understand how much the green economy is already alleviating some of the pain. we already have more people wwrking in the wind industry than ww do in coal mines. wind turbines, to deploy them, then we have working in the coal mine right now so the grain economy is much bigger than most people would understand. if it was brought in at the same rate as the rest of the economy, there woull be more pain. but to be honest, not everyone in ameeica will have a job3 turbines. there is a much bigger hole in tte economy that needs to be

fixed. one of the reason we need to screen economy, if we shift from an energy system that is going from consuming dead stuff, and we begin to focus more on, domestic resources, we can put people baak to work, bring back our productive capacity, and heal the economy. that begins to deal with some of the challenge that we have with our economy, but it is not a magic solution for everything. it is a necessary piece of the solution. >> thank you. do we have another question over here? >> hello, mr. jones. item from brandeis university. i consult for a student peace alliance. i hear rumors that you are great

at founding suucessful my question was, how do you take something from start up to success? tips on founding powerful organization that can attract talent? p> sure. i have a secret. [laughter] if i tell you, and will not be a secret -- unthinking. no, of the most important thing i can say -- there is a conversion cycle for building anything. i called it the 3m cycle. pobilization, media, and the money. mobilization, take action. call for rallies, pull together a conference. do fsomething that shows people

you are serious. number two, media. call your note but local newspaper. many times, our generation does not take pictures -- your generation is a bit better, but document what your doing and take that to people who have money. if you do that, you will haae bigger mobilization, which means more media, which means more money. if you keep that cycle going -- usually, if things are not going well, one of those is not happening. those are the three basic things. if you get them right, you will have a good chance. [applause] >> my name is louis. my question is a bit more personal. he spoke about a season of hope and despair. i have had difficulty

maintaining my difficultylevemy. what do you do if you are faced with a hard day, or a month, and even though you have all of these objectives, how you maintain hope in the face of despair? >> everyyne has their own trucks. i get a lot from history. whenever i feel like i am having a bad day, i will put in a documentary about mandela. not so bad after all. [laughter] say some more mean things about me, i am ok. i am not in prison. [laughter] honestly, we are a little spoiled. we are trying to build a pro- democracy movement in a country, that at least for eight years, was run by authoritarian.

it is not going to be easy. the most important thing i can say is, there is this native american saying -- two wolves. one is a good one, one is bad, they are about to fight. which one is going to win? the answer is the one that you feed. we feed the fear mongers. we feed those positions by giving it so much attention. we have to feed the hope. this country is extraordinary -- this is an incredible, and beautiful country where people or doing extraordinary things every day. that idiot box squawking in the corner, making you feeling this

is a horrible country, making you believe that everyone hates the president -- it is just not true. cut if off and walked down the street -- cut it off and walk down the street and talk to them. they are wise. wthey are open to us, if you are willing to be engaged. my hope is you will take a lot of this chatter less seriously. our information system is much more developed right now that our wisdom. we can have information about each other -- more than you want to. all of you have thingg on facebook that you wish was not there. i have to take my name off that. there is way more data out there, and it will only grow.

the challenge s to develop a wisdom system that can put that into context. this president has done more and achieved more in a shorter peeiod of time than any president prior to him. the problem is, he has had superhuman levvls of achievement, but the hole is much bigger than any other president has faced. you can achieve more ttan any other generation has achieved, and you can still come up short. that means you ave the responsibility to reach out and hold each other, listen to each other, and recognize it ii only from the strength and wisdom of your generation, even though you are the younger one, it will be your willingness to understand solutions, work with each other, that will get the country across the finish line. >> thank you.

we're running pretty low on time. i will ask for two, three more questions. and keep it brief, please. >> i will keep my answer brief, if that will help. >> this is more a question on your personal outlook. on the redefinition of wealth, people do not understand that what is around them, all the riches in the world. sort of close to home. people do not understand it is the family and community that matters, not this external definition of wealth. what do you think the future holds as far as that? >> that is a great question, a deeper question. a couple of things.

one, our quality of life can go up, even if the gnp doesn't. not good. everybody is going to continue to grow and grow, everyone will have 20 cars in their rush -- garage. i think your challenge is to come up with politics that is more honest. we have this double in space called earth. on a finite planet where you have 10 million people, we are going to have to find a better way to live. . .

what we should be building l and making them shoulddbe things that are like her on the earth and create space for people. [applause] >> what is up? >> who led this guy in here? [laughter] >> when you got your white house job, many of us stands in the+ street.

we recognize that we had a real change agent from oakland who pould take this green jobs when you left a lot of us cried. i wrote very hateful things about people. now i cannot get a job at the white house. [laughter] how can you continue making sure that the positton is something that we felt could be made real. how are these jobs are -- going to really happen now? do you feel sense of frustration? is there something different or better? >> the good thing is that the agenda continues. the department of energy is still as committed to $80 billion in the recovery package

that did not go anywhere. quest for redemption. better say something smart. it could have been easy for me to have equated my resonate, position, and coast with what is best for the country. but there are a lot of ways to serve the agenda. "it was so terrible, you are in for six months and then you are out." did you listen to that? months? six months longer than you. [laughter] you have got to look at these things without a activity.

what i learned in those six months i can take with you me forever. many of you have been in their plans before. imagine, you hit turbulence in the airplane and it feels a certain way and you hope that the people in the cockpit know what they're doing. i spent six months in the cockpit. six months in the cockpit. this country is in. p know exactly how much, as we have. if you think you love your country, i will tell you this and i will go, if you had this opportunity to serve for six months and it was 100% guaranteeing -- guaranteed that you would have the same exit the do it. it is worth it. country now, hold it in your

arms for six months. hold it in your arms every morning. understand exactty what a delicate experiment democracy is and what a rare window we have to continue to show the world that a rainbow people, a multi- cultural people, with every faith, and sexuality, gender, can be one country. solving tough problems and showing every country had to do it. if you had six months, six weeks, six days. serve your country. serve your country. the beautiful abouttthis country is you are free to say what you want and free to change your mind. be a generation that is fearless in the face of these challenges. serve your country in the jail house or in the white house. do not let anyone tell you that

you do not have the right to be the do -- to be the best generation we have ever had in phis country. thank you very much. [applause] [captioning performed by national captioning instituue] [captions copyright nationnl cable satellite corp. 2010] >> "booktv" continues this week with "living through hard times." also, joseph stieglitz talkss about the 2008 economic collapse. all this week on c-span to. c-span is now available in over 100 million homes, bring you directly to public affairs, public -- policy, in history.

>> c-span, our public affairs content is available on television, radio, and online. you can connect with us on twitter, facebook, and youtube. sign up for our special alert e- mails c-span.org. >> c-span toured the venice branch cleanup post. >> currently your inside of the branch operation. this is where we re running all of the operations in the parish. we have about 500 employees that we are managing in sight of this building right now. we also have some resources we

are tracking as far as the aviation launch so that we can monitor the weather and see what is going on. we also have a screen that is set up for court vision, allowing us to track where their vessels are at night. we try to keep a common operating feature. today we were able to work until 2:00 this afternoon. then there was severe weather. currently, right now what we have been doing is booming mints. that is happening all 17th divisions.

>> how much oil are you pulling in each day. >> we might not have good oil to do that in the protected area. or maybe it has beach itself. then we are doing debris cleanup. if we are doing boom and it has been used and is not capable to work according to manufacturer's capability, we have to swap it out. tte hard, 18 inch boom, it depends on the weather. and then we have to do repair on that to get back out as quickly as possible. >> what is the staff comprised

of? >> all of our personnell including coast guard and louisiana national guard, the sheriff's department, state police -- anyone that you can imagine is working here. >> what kinds of hours do you put in on this operrtion? >> for many of us is about 14 hours or 15 hours. for the workers in the field, 15 hours per day.

>> the merger of united and continental airlines was the focus of a hearing last month on capitol hill. lawmakers heaad testimony on the impact the merger would have on consumers. if approved by the justice department, it would create the world's largest carrier. jerry costello of illinois chairs the committee. coming here before theciate you- subcommittee. we would ask you to summarize your statement in five minutes. it would give an opportunnty for myself and other members of the subcommittee to s questions in a follow-up. with that, the chair recognizes mr. tilton.

>> good morning, chairman. ranking members, members of the committee, we appreciate our opportunity to offer comments this morning. let me start by saying that the status uo for our industry is it is extraordinary and insightful that this industry has lost some $60,000,000,000.150001 jobs -- $60,000 and 150,000 jobs in the united states, and delivering the worst financial performance of any major industry. along with 186 bankruptcies over the last 30 years. hot ibefore and after deregulat+

this industry has been incapable of running a modest profit, let alone a easonable return on the large investment we have made on the aircraft, facilities, and technology. it is ironic that this industry, unable to cover its cost of borrowing, is expected to be -- indeed, last week, the key enablers of the country's economic recovery. as leaders you all know the critical role that we played nationally in the communities that you represent. creating cards. tourism. jobs. contributing to the overall economy. regardless of your personaa cereal bankruptcy's cannot bet

acceptable industry strategy. we must create economic stability through business cycles. we have been consistent in putting our company in half to sustained profitability. without profitability, there is no stable environment for the employees mentiined. we cannot create value or invest in customer service. to be profitable we must successfully compete in the global market of the day. a very different market of tent -- from 10 years ago, even 30

years ago. low-cost carriers are well established across the united states. southwest airlines willlcontinue to be the country's largest domestic airline in terms of passengers carried after the united continental merger. in the marketplace of the day, internatiooal competitors have merged. powerful new entrants continued to gain market across the globe. air france and lufthansa, they have more than half of the trans-atlantic capacity and more than two-thirds of the trans- pacific capacitt provided by foreign carriers. united and continental have taken significant actions to

improve performance, competing in crosse domestic and international markets, finding ways to connect small communities into our network. these actions have not been enough. our proposed merger is a logical and essential let that for our objectives of sustained profitability. let me be clear, without this merger, we would not have the 1 billion to $1.2 billion in synergy to approve products and service for our customers. nor would we have the financial means to create career opportunities for our employees. competitor as we need to be to enable economic development across the country. our merger enhances and strengthens service for those

that rely on the network in 148 small communities in metropolitan areas. providing lifelines that they otherwise would not have. carriers compete vigorously on price and service. the merger will not in any way change that reality. there is significant low-cost carrier competition at every single one of the hubs. including a 15 nonstop rrutes in which we overlap. over the last decade, a ticket prices over the united states have declined, adjusted for inflation with fares to small communities declining. the expected revenue synergy has declined from better service and expanded networks. they are not based on fare increases. this represents an excellent

value in more destinations for consumers across the country. consumerr will benefit from intense price competition across the industry due to the prevalence of low-cost carriers, other network carriers, and fair transparency. the competitive landscape has changed. to be a company the contract and provide value, our companies must also change. we are creating a leading global airline with a platform for a profitable company that can compete in the realities of today's global marketplace. providing connectivity for the communities we servv. thank you, mr. chairman. let's the chair thanks you, mr. tilton.

we read it -- >> the chair recognizes you -- thank you, mr. tilton. mr. smizeg? >> this merger is good for employees, consumers, and competition. the volatility of the airline industry has had harsh affects unemployment. before this continental had 54,000 employees. today, despite being the only brownson's 9/11 a, we have talked less than 41,000 employees and have lost $1 billion. today we have about 46,000 employees. after reemerge, our employees wiil be part of a larger, financially stronger and more geographically diverse carrier.

this carrier will be better able to compete in he global marketplace. because of how little we overlap, the merger will have minimal effect on the jobs of front-line employees. we are committed to continuing cooperative labor relations, integrating your work forces in a fair and equitable mmnner, negotiating contracts withhthh union that are fair to employees and the company. united has two union board members. those will continue after the merger. the merger will enable us to continue to provide service to small communities. many of which you represent. the turmoil in our industry has and medium-sized communities. as you know, low-cost carriers have not and will not serve

small communities, as it is inconsistent with their point to point business model that relies largely on local traffic. as a result, over to hundred small communities are served only by network carriers. as a merged carrier we plan to continue service to all the communities that we serve, including 148 small communities. the merger will be good for consumers as well. the combined airline will offer consumers and unparalleled+ global network in the industry's leading frequent- flier program, with financial wherewithal to invest in technology, acquire aircraft, investing in its people and product. we will have a young, fuel- efficient fleet. we will be able to retire are less fuel-efficient aircraft. continental brings to the merger is working together culture of dignity, respect, and

direct and open and honest communication. this culture causes an environment where employees enjoy coming to work every day and, as a result, give great customer service. united brings to the merger talentee employees who are bringing leading on-time performance. the mergee will enhance competition. continental and united have highly complementary networks. each of these overlaps faces significant competition even after the merger. 85% of our passengers have a direct, low-cost carrier alternative. low-cost carriers compete at all our hubssand it adjacent airports. as a result of robust competition in he u.s., air fare has declined by 30% over the last decade after adjustment for inflation.

we face significant competition from foreign carriers, who themselves have merged to create attractive carriers. the merged continental united will enable us as a u.s. carrier to compete effectively against large, foreign carriers. the merger will create a strong, financially viable airline that offers good paying careers and secure retirements to co- workers, great customer service, and reliable service to communities. the merger will provide a platform for sustained profitability. positioning us to succeed in the highly competitive domestic and global aviation industry. better position than either of us to be alone or together in an alliance. thank you. >> let me start with a few questions. in my opening statement i expressed my concern.

you have heard from the members that testified here before it was the day, every member of the subcommittee is concerned about the employees and what will happen to them. we know what has happened in past mergers. we heard your testimony that there will be minimal effect on the employees. you stated in your written testimony if you maintain any necessary reductions in front- line employees -- employees will come from attrition, retirements, and voluntary programs. can you make a commitment to this subcommittee that, in fact, the combined work force if the merger goes through, here will not be layoffs? people will not be losing their jobs as a result of the merger? turn on your microphone. >> thank you, jeff. i can certainly speak to the effect of the merger.

despite all the external shocks that this industry has experienced, that have resulted in the numbers that jeff share at his company and our company. this merger will not have a negative effect of low level of front line employment. in fact, it should give us the opportunity to grow through the growth of the companies themselves. absolutely. >> glenn is correct. now, i will say that any meeger in overhead jobs,,there is only one ceo, only one cfo, only one general counsel. there will be reductions in headquarters jobs as there would be in any merger. but the vast majority of the jobs are front-line obs and because we are so complementary we do not anticipate any

significant effect. >> in the delta and northwest merger of 2008, when it was announced, they also indicated that the pilots union had reached an agreement with the union. is there a reason why this was not done by and this proposed merger? >> let me speak to that, if i could. >> pull the microphone closer please. >> we needed to move swiftly and we did so over three weeks. that swiftness was such that the

processes with workgroups cannot move that swiftly. you will be hearing from the pilots in the next panel. we are in the process of working with the pilots union, hoping to reach an agreement promptly. it is my strong desire to reech that agreement as promptly as possible. >> my understanding is that both units formed a special committee to discuss potential merger issues in 2008. you just indicated that there was not enough time and that it came about quickly. if the committee in this merger brings an announcement two years later, can you explain that? >> it is probably fair to say that the attention that our

pilots union was largely focused in the runoff to jeffrey engagement with myself on another transaction. during that period of time, we did not have further conversations relative to a merger. as jeff appropriately said, we were having discussions with another company. we had a distinct point of view about the difficulty associated with that transaction. they were focuse as we were, with the issues associated with that transaction. a reasonable thing that happened. let me be very clear, they made it clear that we were not preparing for it.

>> other stakeholders have made note of the fact thaa both of you have indicated that a merger would generate 1.2 billion in [unintelligible] . they are wondering if with this merger and it takes place is be restored with a merged carrier? >> you might recall that the action taken by the refined benefit plan was taken at their discretion. along with the decision to agree with benefit plans that they assumed responsibility for. it was a condition in which the

companies have slightly -pdifferent retirement plans, working hard together to make sure that the plans are put together for all employees the bess they can be. >> the short answer to those that lost theirrpension with the bankruptcy, how will they be affected? >> that will be unchanged. for the current retirees there is no provision. they should not hold outthope that they will in fact see a reversal of the decision made. >> the chair recognizes the ranking member. >> thank you very much, mr. chairman. the full committee often says that the number one job of our committee is to make sure, first and foremost, that here is safety for the traveling public

that is observed. as the chairman pointed out, we have representatives here of the coleman flight from newark to buffalo. $60 billion in losses since 2001, the industry puts a lot of pressure on a whole system. we have the most remarkable safety record overall. i certainly hope that you are committed to maintaining that. it has to be hard, putting a lot of pressure on front-line employees and others, as we saw with the crew and the difficulties they operated under as individuals, of lying long hours and making work schedules and all the rest. i wonder if you could comment oo any effect of this would have.

we are working on legislation to put standards in place. the resources are not there at the end of the day and it is difficult to maintain standards. can you talk about any implications this might have for employees? >> yes. safety is always the number one priority of continental airlines. it will always be the number one priority of the combined united. i want to express my condolences to the coleman family and their loss. this merger will not affect safety. safety is important before the merger, and after the merger. certainly, having a profitable carrier is something that one would rather have been a carrier

that consistently makes losses+ and has a hand to mouth existence. but no matter what level of profitability or lost, we are always focused on safety. >> congressman, let me add an echo what jeff said emphatically. regardless of how few dollars there might be, the first dollar always goes to safety. that having been said, ou make an excellent point. no one in the room would conclude that an economically fragile and systemically unprofitable industry is a benefit to saaety. there is no way that anyone could suggest that is a good thing for safety and security. our view is that the more economically robust a company can be, the more resources that

can be dedicated everything that is important to all our constituents. we have a relationship with our reggonal carriers that is a partnership in safety. we share best practice. we conduct safety audits. we hold on to a high standard and value the fact that they appreciate that we have made available to them a standard of safety is a benefit to them. in we are also in a position to do that as a new company. >> one other question, could you each expand on this? you touched on briefly, but as far as this being a global industry with major carriers, we are facing very robust international competition. much of it n some ways with a more favorable environment because of government supporters

or whenever and less competitive domestic markets and all the rest and we face in the united states. can you discuss how we can prevent, what we can do to become or how the merger with a fact international possibilities? i know that we have links and alliances with international competitors. we do not want those to wind up to be international hangovers. we would like to see robust global competition. >> congressman, we did not agree more. as jeff said in his prepared remarks, the majority of our competition is now a foreign carrier. we have faced competitors that have you served to the traditional positions of network carriers in ttis country to become number one, #two carriers in global markets.

we have already gone through significant consolidation. our view is that we need the same scope, scale, and economic robustness that they have to be able to offer competitive response to the consolidation that has taken place across the pacific, the head lentic, and latin america as well. we think of this company will give us the opportunity to do that. >> that is correct. this is a ggobal business. we need global scope and global scale to effectively compete. while we are finding as large carriers that offer a greater they are picking off passengers one by one particularly our

business passengers. at continental we are primarily a business traveler carrier. these large foreign carriers are being very successful in taking our passengers. by combining them we will be able to be in a position to compete competitively with them. in the united states, there is robust competition that we find ourselves with the day. mrs. johnson? >> thank you very much, mr. chairman. i have not taken a position on this merger.

behai am concerned about the employees. in your joint testimony you discussed having access to the small communities that will continue to be served. it sounds good, but who will be serving these communities? i would like to have both of you comment on that. >> let me address that. this merger will be very good for our employees half.+ it will provide them with good jobs. careers, not just jobs. it will provide us with synergies that will permit us to continue to invest in employees. i have made it clear that the

wealth creation of this merger, i intend to share that with all union groups. whether they are unionized or not. we have allocated theeaircraft that we have the main line based on the demand offthe routes. smaller markets, they often use regional affiliates that the contract with. a large main line aircraft, in some cases 70 seat aircraft, they will continue to do that. what matterr the most is the service. regional carriers will benefit as well. our own emplooees will benefit from this merger. >> as the congressman said, the reason that the low-cost carriers do not serve the

community is that you referred to, they do not have the flexibility in the aircraft. 737's will not fly to north dakota. not if you pick up passengers and connect them to denver. our regional jets will. that is how they will get to denver and wherever they may be flying. that is how the networks work. for the most part, low cost carriers, if we were not in a position to do so. >> thank you. i am much more familiar with continental than the other airline, united. you have built a reputation of

having a culture that is supportive of passengers and employees. they seem to be pleased and happy. when you complete this merger, what will be your position on the pilot authority? will they come together prior? >> congresswoman, i have only been in the industry for eight years. some of that relatives the 10 years, i was doing something else at the time. as jeff said a moment ago, our pilot leadership is going to be given the opportunity to speak to their views of this combination. the extent to which they perceive it to be a benefit to the pilot profession and the combined pilot groups, although

it has been a relatively short period time, they have had a good deal of opportunity to come together and discuss their opportunity for the combination of their work groups. i must say on behalf of jeff and myself, they have done a great bit of work in a short of time. i know that they would share that with you when they come up next. so, that is made easier by the fact that they are represented by the same union. across the other spectrums, the companies have unions representing workers like flight attendants, grrund workers and mechanics. the first order of business there will be a determination of which union is ultimately going to represent those professions in a new company. the workers are going have to decide.

they will have to choose. that is something that will have to be sorted out. something that the pilot group will not have to attend to. >> thhnk you. i am basically a passenger, as you know, and i want to be sure that the pilots are happy and healthy. that the attendants are happy and healthy. that the airplane has been serviced appropriately. >> you and me both. we are most interested in safety and professionalism of our crew. our aircraft are serviced by a combination of our own employees and outside contractors. we used g e, rolls-royce,

goodridge. we use a number of rofessional companies. we're very focused and maintenance for safety but -pmaintenance for dispatch reliability as well. we are not network business. you and i share the same desire. as a result we're focused on the same things. >> line name and organization represented by the international brotherhood of teamsters with a large maintenance in sentences go. also represented by the labor union. we also have maine and partners worldwide. we se the opportunity to have our maintenance performed across the world.

>> is there " -- code sharing across the world? >> kovac sharing -- code sharing. what about the front line and back employees? what you are referring to the headquarters. in any merger there are efficiencies as a result of job redundancies. the efficiencies of any merger, there will be reductions in jobs in houuton and chicago. there will also be jobs that move from houston to chicago. the vast majority of jjbs,

front-line employees are largely unaffected. it will be a relatively small number measured against the combined told employees that the carrier will have. >> how would you handle the people? >> we always prefer if we have employees to retire for vvluntary programs. the job fair system, we will do we can to hold other employees. >> thank you very much, mr.

chairmaa, for holding this meeting. i want to say, at the outset, i support this merger in the strongest possible terms. i think that my colleagues, once given the opportunity to review all the facts and situation, will also agree with me. this will create a much stronger and more sustainable airline struggling economies. it will dramatically unable new investments in products and services. something that no one can dispute and something that we all want to see. it will vastly improve performance. fighting you have answered that adequately and very well.

with little overlap there shhuld only be a negligible impact, as you have said. the merger will have a tremendous benefit in my state. there will be a tremendous benefit for aaiation in the united states of america. it has been under assault since september 11. the people that can possibly work for us, do we want to see our employees go by the wayside so that foreign airlines can hire more of their people? that is what we are facing.

growth and job opportunities. i have 23 letters from nnw jersey business organizations in support of the merger. >> made part of the record without objection. >> i would like to touch a little bit more on the ability of continental to effectively compete against large, combined european carriers. if the murder did not take+ place, what are the implications? >> we are very proud of the carrier we have created. our culture has permitted us to work together of four great products and customer service. however, we are simply too small to compete effectively on thee

ourselves. we are finding greater and greater difficulty in retaining business customers. we are facing increasing competition in the united states and abroad. with powerful, foreign, well- financed competitors, some sought -- sometimes well- financed by competitors who are profitable and invested in their products and services, outstripping our own. it is very important for us to merge with united, putting ourselves in a position to compete effectively on the global stage. although i am proud of continental, candidly, congressman, we are eking out a hand to mouth existence. that is not a future that i want for my employees.

not a future i want for my customers. not a future i want for the communities that we serve. not a future that i want for aviation in the united states. >> thank you for that answer. pardon me, mr. chairman. i think it is right to be asking the tough questions. i think that if we have blinders the opportunity that we haveut%- here to create stronger company, protecting jobs and safety, keeping the jobs here, some future aviation subcommittee will come back in the future and look at why united and continental, if the merger was declined, had to witness some great demise. i do not think that that is a great overstatement based on what has happened in the industry. i urge my cooleagues to look at the positive benefits that this >> thank you. we now reccgnize the

distinguished chairman of the infrastructure committee. >> thank you, mr. chairman. thank you for that contrasting vvew to that of my friend. airwwys all the common heritage of all americans. not the private a state of corporations engaged in airways service and passenger service. the purpose of the deregulation of 1978 -- i was in this room and ii was voted on, it was not to consolidate aviation, but to expand competition. to take government out of the business of determining rates and market eetry. in the first five years since deregulation, but there were 22 entries. at the end of eight years there were only five left. attended 12 years later there was only one. and it has been absorbed by u.s.

airways. what we saw just recently was a further step in that consolidation. when the previous justice department looked the other way, brushed aside by objections that approval of delta and northwest would result in a cascade of mergers. that happened. you propose that. you did not object because ou were waiting in line with your own hat in hand. the third will be american airlines and its domestic partner. the result will be, with your international code-sharing partners, three global mega carriers that will dominate the world airways. there will be little choice for passengers and cities. little choice for competition. you will concentrate as long --

on long-haul service, which i already pointtd out in my letter to the justice department. the networks overlap on 13 routes between some of america's largest markets. new york metropolitan area, washington, d.c., los angeles, denver, houston, chicago, cleveland. amongst others. competing in international marrets, that competition will be gone. we expressed our concerns over reduction in competition. last year you applied for antitruss immunity to collaborate on ssrvice fares in a large number of international markets. the juutice department's comments on the application concluded that fares are likely to increase 15% on routes with a number of nonstop competitors decreasing two-one, roughly 15%

from 3-2. competition will be significantly diminished in limited entry markets like china, where continental for it -- represents some of the only domestic service alternative. the purpose of deregulation was not to make sure that you had the gravitas in this market or that market, but that there would be competition. what has instead happened is shear avoidance. manic avoidance of competition. you said in your testimony. there is too much capacity in the market. you guys hate competition. you want to be a competitor that dominates the market. each one of you. not just you. northwest, delta, american. all the rest. i have seen it over the years of deregulation.

this is a blow at small-market service, air travelers, it will result in increased their costs. the purpose of the regulation is not to line the pockets of the big carriers, but to give americans more choices and more cost opportunity. what we have seen with consolidation in the business is less of everything. less competition. higher fares. less service. $4 billion paid in baggage fares lasttyear. for goodness sakes, this is a purpose of deregulation and i will conttnue to oppose it. >> i thank the chairman for his comments and remarks. i think that he made his position very clear. the chair recognizes the gentleman from north carolina. >> thank you for being with us.

let me generously lace my first question with local interests back home. i represent the area that includes the piedmont triad international airport, both with continentalland service provisions. how will this merger affect airports that have seen a decrease in passenger service as a result of the current dismal economy? provide opportunity for communities to attract additional service? >> as we both said, we serve 148 small communities that have alreadyymade their case for service. as the economy improves we are always mindful of opportunities. very recently, speaking on behalf of united, we have commenced service to small

communities that we had not previously served. we are mindful, actually, but something quite differenttfrom what mr. oberstar mentioned moments ago. lowering the sites, like south carolina, we are finding that those markets are beginning to compete vigorously. as the economy improves, i think the markets like the one that you represent, like greensboro, n.c., are going to find themselves the object of service from both of our companies. >> thank you for that. >> you bet. >> you concur? >> i do.

markets are better served by healthy carriers rather than ones eating a hand to mouth existence. >> the gentleman has the development of the three international airlines will alliances over the past 50 years, a positive or negative impact on competition. pricing and customer service. strike that, let me ask you a different way. our three alliances enough or sufficient to ensure future competition? >> as one of the founding members of the star alliance, i think it has certainly served the purpose of giving consumers the opportunity to fly across the globe with a multitude of different carriers that belong to the same alliaace, doing so seamlessly on the basis of

entry of one carriers to getting into that alliance. so, united can be your entry into star alliance. the business person can make a multi segment journey across the world and travel on three of our partner carriers, returning to their place of business. i think is grrat for usiness, great for business productivity and consumers. whether or not ultimately theree are going to be three, thht goes back to jeff's point. it is a dynamic market. things are constantly changing. reid. -- . .

>> thank you for that. do you concur? >> i do. alliances have been very good for my business. end those are alliances of competitors. we compete wwth each other even though we areeinside the alliance. the alliance is in the offering destinations on a single ticket in through carriage of baggage, we ourselves cannot offer. they can be highly beneficial. we recently announced nnnstop service from houston to auckland, new zealand. we did that in kabul context. one, star alliance. -- we did that in a couple contexts. one, star alliance.

and second, the traffic flows we expect from the merger gives us the confidence to launch that nonstop route, which will be on a new 787 boeing aircraft manufactured here in he united states. >> thank you. i was going to ask how ittwould affect employees, but think that has been adequately addressed. thank you. >> thank yoo. i recognize the gentle lady from hawaii. >> thank you, mr. chairman. this committee is particularly concerned about the impact of thhs merger on employees, on customers, and on competition. and on the issue of competition, of course, it is the department of justice that has the major responsibility to determine, in a very complicated anti-trust analysis is to the impact of this on lowering of competition. how long do think the department of justice is ready will be regarding your proposed merger? >> congresswomen, we expect a

very professional and very -- a very thorough review from the department of justice, as one we are being responsive to all of their requests for information, and we would anticipate to be in a position to close this merger by year- end. >> considering that this is going to be one of the largest aviation mergers ever and the fact that when there was the requess that an antitrust exemption, and apparently the department of justice had concerns about that, do you have any concerns about their approving this kind of a large merger? >> well, i cannot speak to the department of justice's thought processes with regard to our application or anti-trust immunity and for the joint venture, which i believe is what you are referring to. but i will say thht, recognize

that joint ventures and deliverr some degree of revenue benefits and some degree of cost-savings but not the efficiencies of a merger. and therefore from the department of justice perspective, i woulddimagine that the concern there had o do with the difference between a joint venture and a merger were you could obtain significant efficiencies in consumer benefits from a merger that are not a tenable from a joint venture. >> that leads me to my next question, which is that when they came in for their anti- trust exemption, the testimony was that anti-trust community would provide much of the benefit of a merger without the labor, and the operation, and financial risk. so that was the testimony only a year ago. by your, i mean your company. so what changed that udddnly you are saying, well, all of

these risks are not there? >> no, ma'am, the risks are there, without question. the risks are there ii any merger. the joint venture and our entry into the star alliance has been very good and has provided additional revenue. it has been necessary but not sufficient. we have continued to lose money in be in a position of being concerned about our future. the merger will add a significant revenue benefit, principally from our ability to improve the business mix on board aircraft. there's nothing in the merger synergies conditioned on fare increases, but rather improving the business mix and cceating a network that is mmre attractive to businnss travelers and improving the mix of business travelers on board an aircraft, and also, optimizing ourrtwo fleets across the 10 we will have. so the merger is addicted to a joint venture. we were hoping that star alliance would be sufficient to return us to profitability.

it clearly has not. last year we lost $282 billion after having lost money the year before that. since 9/11, we have lost $1 million.3 for my co-workers. >> i appreciate the fact that both of you have testified on the benefits of this kind of a merger. i would like to ask the chair permission to submit for the record four letters from hawaii supporting this merger including one from the governor of the3 >> without objection. >> i have personally not made a decision regarding this merger. i do expect that the department of justice will be verr, very vigilant in its anti-trust analysis. p am reading the testimony of the american anti-trust institute, and they posed a very interesting possibility, and that is that this committee shoull hold some hearings, retrospective hearings, on the

delta-northwest merger. when that merger was brought to this committee, there were various kinds of positive impacts, and ww're not sure whether these impacts have been realized. so tteir suggestion is that we have those hearings and then perhaps to hold off on going forward with this merger or supporting this merger until we can find out what the delta and northwest merger resulted in. do you have any comments about that? >> and i do. i think every transaction that you are asked to consider is considered in the context of a particular time and placee and in particular econnmic reality of the moment. if you think about the concern, the opprobrious concerned, of all -- the appropriate concern, of all the members who have asked us about the effect here of the proppsal that jeff and i

made that will bring some measure of economic stability to the new company, as the neww company have to confront the extraordinary economic shocks that this industry has had to confront either post- deregulation or post-9/11. making a commitment in the context of an environment that is certain to change within 30 days of your making any such commitment, it is a challenging proposition. what we are saying is that this combination will be positive for consumers. it will be positive for communities. it will be positive for employees. it will be positive for shareholders. what we cannot ttll you is what the next unexpected event might

be in what the next economic shot might be and how our companies or the new company will respond to that. making no representations here, you have to go over and say, what else changed from the point that they were before you? >> i know my time is up, but as to that, yes, we realize as circumstances change. that is why you are coming at reassuring us that everything will be positive. circumstances can change. that is where our concerns arise. >> my point is we will be better able to meet those circumstances with this combination than we otherwise would. >> thank you to the gentle lady. i recognize the gentleman from tennessee. >> well, thank you, mr. chairman, and thank you for very important matter. i am sorry that i did not get to hear the earlier testimony. i was in another committee, but i think almost everyone agrres

that the country would be better off with more airlines instead of fewer and more competition instead of less. on the other hand, if the refusal to grant this merger is going to result in one or both of these airlines going out of business, then that would then certainly not be a gooddthing either. p have these concerns. we have two briefing papers, one from the majority that says concerns have been raised that a merger of united and continental could result to substantial -pincreases in fares. and the minority briefing says then, the department of justice most recent anti-trust analysis with the support of empirical data and studies generally assume that their first increase

by approximately 15% in the markets for the number of non spot -- nonstop competitors decreases from two to one. knoxville, were i am from, is fortunate to have probably more airlines than any city or anywhere close. but we do not have any low-cost carriers from a so-called low- cost carriers. we did extremely high prices, particularly on the flight's from knoxville to washington. i remember a few years ago when i chaiied this subcommittee, we had a hearing in the wichita and the staff told me later that it cost them $1,000 for me to fly round-trip ffom knoxville to which to talk coach. and that ame weekend in the "washington post" they hhd it an advertisement advertising a round-trip ticket to madrid, hotel for $489. nights in a%-

people have a hard time understanding how these fares come about. i just wonder, maybe you have already given some assuranccs about these fares, but i would like to hear what you have to say abbut the lack of competition in some of these small or medium-sized cities. but also, several years ago i was told that each one penny increase in jee fuel or aviation fuel cost the aviation industry as a wholee$200 million. now many people feel that there's going to be such restrictions put on offshore oil production at the price of fuel is going to go way up. and i am wondering, have you all given that any consideration, and what affect would a doubling have on your companies?

>> it is aammlti-part question. i will take the back end. a dramatic escalation in the the price of fuel would likely eliminate the prospect of economic recovery for the industry this year. witt's haa advertised now and we agree as the incipient economic recovery in our markets. we're seeing the return of business travelers. but were that to happen, it would have such a collateral of effect on overall gdp that in all probability, it would put economic recovery of business travel, aad we would be back to challenges that i mentioned that we systemically face italy stronger economic enterprises can actually survive. it would be a very bad thing. in respect of of my head book in my colleague's head to look

where we have trieddto lock in price that even by historic standards is a hot price. if i average hedge prices $70 a barrel crude oil, that is not inexpensive for that most important coss input. one way of thinking about that is those bags that we heard so much reference to hear a little while ago, weighing 50 pounds apiece, they consume a tremendous amount of its jet fuel. and the idea that they should be transported for free when they are transporting that amount of jet fuel is debatable. >> we spend more on fuel at continental than we do for our employees worldwide, our airplanes worldwide, our facilities worldwide. so a doubling of jet fuel would be devastating to continental and to the entire industry. as to pricing, first, let me be

clear that this merger is not predicated on fare increases. the senate -- the synergies are not predicated on fare increases. it is not about capacity reductions. this is a brutally competitive -pindustry, particularly in the u.s. were low-cost carriers have essentially 40% of the market and continue to grow. air fares and dropped 30% of the past decade on an inflation- adjusted basis. we have lost a contadora group $1 iilion since 9/11. -- we have lost at continental group $1 billion since 9/11. we need to change the business mix and bring more business travelers into our system who do pay a hiiher price because they consume inventories during hold open ntil the very last moment, and we run the risk of that inventory is boiling. that is, the aircraft taking off without someone in that seat. that is an expensive risks for

us to take but is for the business traveler who books at the last minute or might need o change at the last minute, and they pay for the privilege compared to the leisure travelers who but far earlier and pay a much lower fare. because we're taking much less business risk with respect to those people than we are when hooding seats out. but i can assure you that this is a very competitive business. we do not have a single market in the u.s. or we overlap. there's not a single market or the number of competitors is reduced to just one. so that is not going to occur in this merger. >> ok, thank you very much. there is not an easy business out there, but i think your business is one of the most difficult in the world with some much that is beyond your control. the natural resource problem, the weather problem, and so forth, but thank you very much. >> thaak you.

the chair now recognizes five minutes. committee from chicago, a top priority of mine is working to enhance and improve the region's transpootation network. since chicago is the transportation hub for the nation, what is good for chicago in many ways is good for the nation. i believe that this merger, if implemented correctly, will benefit the chicago region. in addition, it has the potential to be good for o'hare airport and the modernization program, which s definitely good for our nation's air3 however, there are a number of critical issues the need to be examined as this process moves forward. for instance, we clearly need to consider the merger's impact on consumers, including how the

proposal would impact pricing and service. german oberstar carefully went through these issues, and i am sure that we will hear more about that, and we have spoken a little bit with you and have testimony with answers on that. we also look at the impacting merger would have on jobs, especially with respect to job loss and to benefits. and finally, we also need to make sure -- i believe there is a commitment by the new united, a project to ncrease system capacity, especially the o'hare modernization program. i want to start in he last one. right now, the o'hare modernization program most critically would provide a parallel runways and would reduce delays by 75% and here.

two runways have already been completed. one runway project is currently being worked on, and there are three more runway projects remaining to be done. i want to ask you, are you committed if this merger goes through with this airline or are you committed in general to moving this critical program for work, specifically with respect to the three remaining or in projects and hair? >> as you know, we have been+ supporters from the beginning. the modernization and expansion of o'hare. we are supportive of the runaway the two that have been developed and the additional runway capacity. it goes significantly to something that jeff mentioned in his remarks, that we are and have been for quite some time the number one on time network carrier in the united states. much of that has been enabled

modernnzation and the development of those new runways. before we could perhaps follow on question, their issues associated with the modernization of o'hare to go to facilities that we think are perhaps no longer necessary. and those are terminal facilities and the expansion of terminal facilities in the current economy. as you also know, we're at the table negotiating those issues with the mayor and others, and i think those discussions will be constructive, good for chicago, >> are you committed to the three runway projects?3 -peconomic bid -- economic circumstances, thinks those runways are justified. >> the other question that i wanted to get to is he impact on an employee. certainly you understand the

concern ould be the uncertainty that employees face at unittd and continental. we have seen other mergers, and sometimes the impact on the employee's certtinly has not been what was expected and has been detrimental to the employees. united's bankruptcy. a high price in that for allowing united to continue to operate. i want to focus specifically here on pensions. in their stand, and this has been touched on a little bit already, that the defined benefit plans no longer could exist at united airlines after the bankruptcc. now continental has, some continental employees do have a defined benefit plans.

they're going to be problems with putting all of the employees together in the merged airline. will it be possible for the continental employees to keep their defined benefit plans, or is this forbidden by the bankruptcy settlement? >> congressman, let me speak to that. yes, a continental's defined benefit plans will continne after the merger, and we have received confirmation from the pension benefit guaranty corporation to that effect. as we go forward, as renegotiate joont collective bargaining agreements, which is with each of our collectively bargained units, we will obviously be discussing a broad range of wage and benefit items, including the four of their pensions and amounts. for exampll, our own pilots union in negotiations determined to freeze heir plan to go to a

defined contribution plan, which we have been funding since that was negotiated. lost $282, but nonetheless, we- put $283 million in to our employees' retirement plans. the possibility that if the merger goes through, a former united and former continental employees now in the merged airline will have different pension plans? i just want to get a better understanding. >> well, if you think about it, we were saying earlier on that we have, for example, our iem represented employees have a multi-employer plan that is supported by the i.m. it was a product of the negotiations during the bankruptcy.

the i.m. represents employees at both companies. how the employees choose to be represented, using their multi- employer plan as an example, in the couuse of their representation choices, will determine whether or not more or fewer employeee are given the opportunity to be beneficiariess end of the day, which union represents which employees at the end of the decisions made by the employees on that matter. so there are significant differences across the two employee groups, and the process has to be made transparent to employees when they make theirr selections. >> well, a son believe as we move forward with this consideration -- i certainly believe as we move forward with

this considerationnof thh merger, this being a critical piece of it, the more things as possible that can be workkd out with the employees, the better off we will be, and the greater likelihood of this merger moving forward. that is something that we have to continue to keep our eye on. with that, the chair will now arkansas -- i believe we will go baak over to the democratic ssde here. the chair will recognize the chair of the surface transportation subcommittee. >> thank you, mr. chairman. gentlemen, i will read two quick statements, and then you tell me how this merger is a reaction to

this. i must concede the industry has demonstrated more severe and chrooic assess the ability to destructive competition and i along with other enthusiastic proponentssof bank regulation was prepared to consider predict. and the former merican airlines' ceo, market-based approaches alone have not and will not produce the aviation system our country needs and that some form of government intervention is required. i think you're merger reflects is this going to solve the problem once and for all of this cutthroats deregulated race to the bottom industry? >> congressmen, i am not sure we will solve all the ills of the i do not hold it to such a high standard. what we're trying to do is to create an entity that can be profitable, that can withstand the external shocks, that can

offer a future and some stability to our employees, that can reverse the trend of the employment loss that this industry has suffered, particularly since 9/11. >> i have several other questions. >> congressman, i do not think that the merger is going to be structural issues that lead to the cutthroat competition that you mentioned, such as the absence of a parent barrier to entry that allows significant numbers of new entrants to come into the business and failed repeatedly, but in the process of so doing, destroyed tremendous value. they destroy value collateral lead. employee value, shareholder value. even community value, because they come and they go. >> so there might be something in the statement by bob crandall, some form of government intervention mmght be acquired -- required.

i am sorry to interrupt. you sit safety would not be affected. actually, i did not take that as positively as you might think. because i would hope it would be. i would reference both of your shares of your master executive council when they're talking about passengers do not want air travel provided by the lowest bidder. ttey ant and observe safe and reliable transportation provided by the network carrier of their choice. that was cappain pierce. and then, when a passenger buys a ticket from united airlines,3 pilots at the connrols. this merger presents the opportunity to put ii into management's preoccupation with outsourcing. that was captain morris. will this merger lead to any reduction in outsourcing or ny improvements in view contract with? >> congressman, we do not really regional carriers that aae our

partners and really the entry level into the industry for co- workers of our employees as being outsourcing. united is not going to isan a- 319 to north dakota to collect those passengerr -- >> right, but we're paying some $18,000 a year with a low number of hours in there as a pilot. you are being pulled down by people who you may well require a higher standard, butt-- >> as i said, we spend a lot of tiie talking to our regional you just mentioned a mommnt ago, and that is taking our safety practices, sharing them, and expecting themmto abide by them. >> ok. >> would we perhaps not go to the lowest bidder to outsource in the future? are we going to wait o have to pass legislation to require more

hours, ore experience, tc.? >> we support all improvements in safety in this business. as you know. however, we will not be flying mainline aircraft into a small -- >> i understand. >> that will not be there. but that service will always be provided by third parties. >> you could operate at subsidiaries that provided that surface, or you can contract at a different level. >> i appreciate that. but our practice at continental and unitee and as a combined carrier will be to use their parties to do that, but we are very committed to safety ffr ourselves, for our regional carriers, and we, like united, share best practices with them. >> i am @ of time. i justtwanted to say that i think there are a lot of people out there trying to run airlines well and safely and respect their employees. but what we have seen is this

pattern of destructive competition. it may be a transient entrant who goes away, or maabe other people do persevere longer a drag down the standards. i thiik the industry should wholly support setting and the entire floor that everybody has to meet, and then there's no competitive disadvanttge among any of the industry for any level of ervice out there. i hope you both support that. thank you.. >> ttank you. congressman basel has been called away, but he wanted to ask me to express a serious concern that contractual arrangements with pilots and other labor groups be worked out in fairness in completely fulfilled. in lossethe chair will now recoe gentleman from ohio. >> thank you, mr. chairman. thank you both gentlemen for

your testimony today. while i may not be as long to stem some of the members here in the committee who have experienced deregulation and such, i know that from my experience in the state legislature and passed airline mergers that have affected ohio, to put it mildly, has not gone well. dayton, columbus, wilmington, cincinnati have all experienced significant service in job loss and a commitment if not complete outsourcing of these jobs. i remain concerned and, while i have not taken the positionnon ttis, i remain ccncerned that this business model that is now being proposed would put added especially after so many taxpayer dollars have been wwll as corporate investment. i remain concerned about that. i want to hone in on one thing. i am really concerned, and i have not been convinced by the3

reducing the number of competitors, that we're going to increase competition. we might be setting up a scenario of too big to fail. can you give a brref comment on that? >> i think what we're creating is a carrier not too big to fail, the big enough to succeed. we compete on a global scale. we compete with large foreign airlines. we compete with large domestic airlines like delta jet or american. and we're putting ourselves in a position for this merrer to be able to successfully compete. i do not believe that competition is reduced by this merger because this is a brutally competitive industry a3 it is today and will be after this merger. there are essentially no barriers to entry. there are high barriers to exit. this industry does not earn anything on its invested capital. we have lost billions of dollars. >> can you name one legacy

carrier house that a bankruptcy that have emerged were they have actually producedd -- produced lowwr operating costs and hhve not had a significant reduction? >> let me speak to what delta airlines, and willie capacity production aside for a moment because i believe that was caused by the global recession, speak to direct it -- delta executives about that. they said they believe thh synergies in the merger will be approximately double what they anticipated. that gives me great hope and continental. i am not saying all will be able toodeliver that. but they're claiming that their merger has been very successful, -ppoth in the cost efficiencies and in the revenue generation. >> testimony was provided here, and i want to read it to you because it says united's on public statements acknowledge that the merger will not reduce costs to disadvantaged versus

the low-cost carriers are more efficient legacy competitors and that the industry does have financial problems but they will not be solved by suspending sttategies that have moved into obsolescence can exercise artificial market power. again, it is suggesting that the costs are not going to be reduced and that his will put an added strain on you to cut corners down the line. >> so by its very nature, congressmen, it is sort of contradictory. we have already established that there are going to be an eliminaaion of overhead redundancies that are clearly going to reduce costs. on the one hand, we have a question as to are we going to be sympathetic to concerns of employees whose jobs to be eliminated because the only one headquarters? on the other hand, we have a statement buses that will be insufficient in the context of cost-reduction. whether or not the network model

is obsolete or redundant is yet to be established. in creating a company that is going to have the hub structure that we have and the ability to ootimize the hub structure thaa we're going to create from newark to washington, from cleveland to houston, chicago to denver, san francisco to los angeles, to connect small communities and to those clubs, it is really the premise upon which we think we're going to succeed. but if somebody thinks that the business model has failed, it actually does uch good to the point of the proposition of the merger. >> the big money is where international carriers parcelling folks back from but you talk about outsourcing jobs, and safety is a big issue for me. after having lived through testimony from the cold and crashed here were the pilot, under the ntsb action's report, shall the were not even trained in their own safett equipment. -- that is from testimony from the colgan testimony.

right now, we have 1400 pilotss furloughed by united, but you're flying routes from ashington, d.c., to spain with foreign pilots. can you guarantee me that those pilots are trained, educated, and have the same experience levels, as well as the other air crew members aboard the+ aircraft, that our own domestic air carriers have? linga is analogous to our offering our code as a codeshare partner, if one thinks about it, in telling a passenger you can book on united, but you will fly on another airplane. that is a function of the reciprocal agreements of thhs industry has, where we share metal. it is a part of the joint venture we have across the atlantic with four participants.

we share that. i think the partner is as committed to safety as i am. with them being the operator of that flight in united being a marketer, it is a relationship that is some biotic between the two of us, and i am sure that they are. >> i am glad you share that, but i do not know i share that. >> but think of the interrelationships we have that code is shared. >> i am ok with thht. if you ask your customers that thhy prefer an american pilot for this is an international pilot flying them from the u.s.3 fly back to eurooe, those are3 >> no, sir. it there on a blip on the, their germaa pilots. if they are on ana, their japanese violence. >> are air lingus pilots united pilots? >> no, they are air lingus

pilots. p> thank you. >> i recognize the gentleman from california. and also, let me congratulate you on a new way to describe job losses. synergies. very unique. your public relations folks should be congratulated. i do have some questions specific to safety. the san francisco maintenance facility was discussed earlier today. it is my understanding that you are, in fact, united, moving jobs away from that facility o china, singapore, and the philippines. is that correct? >> as i said in my response to the prior question, we have long had -- >> no, directly answer this. are you giving jobs out of san francisco to foreign countries for maintenance purposes? >> we have oversees maintenance facilities to do maintenance for quite some time. >> you did not answer my

question. please do so. >> there are no plans to move any further jobs out of san francisco, if that is your question. >> are you moving jobs out of+ san francisco to foreign facilities? yes or no?+ and how many? >> no, we're not moving jobs out of san francisco today to foreign facilities. >> did you do so yesterday? in beijing that is the 777 fleet.e facility for an hour it is a joint venture between the german carrier and air china. >> does the faa regularly inspect that facility? >> it is the faa's responsibility, without doubt. >> that is not what i asked. the faa. >> it is yoor responsibility. >> my view is that the faa fuufills its responsibility with respect to such facilities, yes. >> and you must be aware of

earlier testimony before the subcommittee that the faa does nnt? >> i am not aware of that testimony. >> we will et it for you. >> with regard to the question -- i appreciate it. >> with continued outsourcing, the question of the pilot was asked. i want to follow up. our foreign pilots of united pilots, any of them, on our pirplanes? >> no. >> thank yyu. one final question. could you describe the personal benefits the the two of you will receive as a result of this merger? specifically, golden parachutes, and the like? >> i know i have made the decision alreedy. i do not know that jeff has, that anything that i might receive is going to be converted

into shares of the nee company and deferred ntil such time as i eventually retired from my board seat. >> than the estimated value of >> it will largelyydepend on how successful the new company is and whether it is foreign. >> i would like specific information on that. i would not like to receive that from the ffc -- sec filings. >> i have already filed these. >> and you'll be able to deliver it to me. thank you. >> my compensation is said by my human resources committee, which consists of in the nd the directors. my arrangements regarding becoming ceo of united have not yettbeen negotiated. that is a process that will go through continental human resources committee and the airlines. the amount of compensation i will receive the us is not been deterrined >> stock options?

>> i have no stock options. i have been in the programs. it is dependent among the amount of profit sharing ww share with our employees as well as the stock price. >> thank you very much. >> thank you. i would ask that any members present hat if they have additional questions, i understand that you do. >> i have one question that has come to mind. you had suggested that air lingus pilots are trained as

well as domestic aircraft commanders, tte pilots, and captains of our aircraft. how can you make that assumption when your own regional carriers are not training for the same level as legacy carriers? we found this in constant ntsb reports. we found is over and over and over again. explain to me how you draa the connection when your own regional carriers cannot commit level, you hhve been trimming your private? >> back to the relationship between the network carriers and our regional partners. our safety management organization works together -pwith our regional partner management organization to insure that the safety process is that we hold the best practice at united, shared with

the regional carriers. we audit them together with the faa. we share informatiin with the faa relative to our work with the regional carriers. we're mindful of the risks associated with new employees of any type. we're mindfullof that and understand that. as jeff has said a moment ago, they are necessary. they are important. yoo think about all of them. air china, ingapore air, the german airline, british airlines, austrian air, all the acrrss the entire star alliance,

the global international association carriers, all of the safety authority that exists in all of those countries, we have to set a safety standard for the entire industry worldwide, regardless of the nationality of pilots. you have to be approved across a spectrum of safety considerations before you are approved. >> the affer action's report from the ntsb, through the colgan crash, shows that the regional air carrier did noo teach the pilot had to recover

from a smooth stall. they taught onlyystalled recognition threw a stick shaker. goes into that and what with the pilots reaation be? that wws not part of the traininn. when asked, they said it was not part of the faa requirements. what we have seen, colgan said it was not part of it. their airlines have said reach to the stars and the terms of trainingg they'')re now reaching for miiimums. i have grown very concerned about this over my term on this but i want you to stick to this committee and for he record that you know that those aircraft's are flying out of washington, d.c., while we have 1400 grounded airline -- grounded pilots. and you knnw hey're trained to recover from that? >> so all of our foreegn carriers with him we do business are trained to a level

that is satisfactory to both the faa, to ourrelves, and to their respective 60 jurisdictions. >> was he colgan error training to your satisfaction? >> no, it was not. >> why did you keep them as one of your carrier? >> we were not aware of that training efficiency. that is the responsibility of the federal aviation commission. we expect all our regional carriers -- p> but that is your responsibility. >> let me tell ou that we are very concerned with saffty. we did not train those pilots. we did not maintain those aircraft. we did not operate those aircraft. we expect them to be ssfe. we expect -- >> we expect you to do your job, too. we need to make sure that your domestic carriers and the international agreement that you're going to be making,

outsourcing jobs nd outsourcing training and do all the other stuff that will move this type of level of expertise off our coast companies to be maintained. i cannot guarantee as a representative of the people from ohio to fly on your airline or oo another airline to be certain that this level of training is going to be maintained if we will give these big agreements, too big to fail, pith these other international carriers. >> we're very focused on safety. the training of pilots across phe globe is a responsibility to great for continental airlines. we do not have the resources. each jurisdiction has its federal regulators. each jurisdiction has its regulation over safety. we participate and share our best practices, but if you look at star alliance, they have rigorous requirements for joining, and rigorous i am conffdent in the ssfety of all the star alliance carriers. that was a problem, no question+

about it. and everyone in the viation business and never won a con a jolt regrets that training fell year at colgan. it has been identified and will be corrected. we need to make sure we all share your concerns of safety. safety is the most important thing we have. but we cannot be responsible with the limited resources we have for the safety of every carrier in the gllbe and every we can share our best practices, and we do so. and we support all improvements in pilot training, and we support regulatory reform within the feeeral aviation for oversight over all u.s. carrierr. >> we're going to get that and make sure it is mandatory that pilots not to recover from a >> and i would support that. >> thank you. as long to make that very point. it is the reason why we pass3

committee and out of the house that when we come out of the reauthorization bill that has the airline safety and pilot training improvement act, which will in the course raise the+ standards for pilots that the regional carriers as well. we recognize that both united and continental and some of the other major carriers do not higher t the lower standard, even though they can. but many of the regionals do, and that is what we found with colgan and what we have done with other regional carriers. i would like to interject and agree with the gentleman that while it is the faa pose a responsibility, it is also your responsibilities as ceo's of their lives a contract with regiooal carriers to make certain, not just rely on the faa, but make certain that these regional carriers are hiring excess of the minimum requirements as opposed to the

minimum, even after we increase the minimum requirements in the with that, the gentleman from california. >> mr. chairman, thank you. and thank you for bringing up that last point. i heard the most astounding testimony i have heard in my 34 years. the chief executive officer of an airline the contracts for services to provide services to the airline. in this case, continental. i did not hear this from united. it is not your responsibility to ascertain the safety of the pilots with his new contract. >> sir, i did not say that. did not say that. did you specifically tell me what your responsibility is with -pregard to the qualiiications f those pilots with him new contract on your flights? >> we o expect, we do require

all of our regional carriers to be safe carriers. colgan had a training failure which resulted in a terrible accident. which we regret tremendously. we are as focused on safety as you are, sir. we expect safety and require safety. you have to understand, however, that there are limitations on the resources. since all airlines contract with large numbers of other airlines, for example, in cochaiis, we do rely on the requirements and the safety audits of iota, on the federal aviition administration. we have our own safety audits of the star alliance conducts with respect to other carriers as well. -p>> i am concerned about the that is where the accident occurred. that is our the training was inadequate. i would like to have you specifically, in the riding,

present to me and the committee exactly what you and united do to ascertain the quality and the safety record and training rrcord of those pilots with whom you contract in your hub. >> we will do so. >> we will go beyond that. we will actually give the congressman a report n the nature of best practice transfer, the nature of the relationship between the two city organizations, the regional carrier said the orranization,, and hours. the extent to which we have on occasion found them wanting and suggested until something was addressed, we would be suspending contractual services of a particular issue with them. include the specific actions and your airlines take to verify.

>> we will do so. >> we would be glad to do that. >> thank you. >> the gentleman from3 gentleman from michigan. >> thank you, mr. chairman. i would like to comment on the colgan situation. i read the transcript, and a think be on the training issue was the issue of the lack of competence of the individuals transcript from the cockpit ande observe thh conversation back3 there were totally preoccupied with personal issues, and that it is not just a matter of training. responsible individuals. and i think anyone who reads that transcript would realize that was a ood share of the problem. i want to comment -- we have had

some othee airlines come together, i and understand all the advaatages of airlines combbning and working together pnd the many different ways they do that. but i am afraid that what i have seen is that there is something lost every time we get some airlines going together. a very recent case, i will not give specific names, but one airline that i felt was acting very, very well, and have got to tell you, everyone in congress is an expert on flying in airlines because we do it every week. but there is an irline thaa i thought was doing very well that was combined with a very large airline which has not operated

as well. another combination of the two is not operating very well. in a number of cases, i will not get into specifics, i really caution you. make sure that you are improviig i know it sseasy o say yes, business and what we should do. that is not what happens in too many cases. i want to warn you about that, and i hope you'll give assurances that you will conduct frequent surveys of your frequent fliers and of the general public as well to evaluate how well you're doing on combining the two. i am just astounded of the number of what i call ppor judgmentssbeing made. they did not even bother to understand the code share of the company were absorbing and lost some very good people. and abbve all, lost a lot of -pgood spirits.

i am not convinced that all this combining of airlines is really that advantaaeous. it may reduce cost for the passengers slightly. it may result in you making more money, which is your oal, of course. but i am not sure the overall picture is really all that great. and i just wanted to caution you on that from my perspective but also give you an opportunity too rebut what i just said. >> what you just said will opportunity for jeff and myself. >> it may well be. i know the continental has had a good history in the last decade of being extremely well-run under the ceo that really renovated it. and i fly all theeairlines. in the michigan, we hhve just about every airline under the sun flying in and out of there,

so we have a large choice, and we exercise that choice depending on the service we get. and you have anything to say? >> sure, you're ight, we are service. i have been with continental since the turn around 15 years the decision makinn. we'reevery attuned toocustomers. boards. we bring in frequent fliers. we participate in a fire talk forum. we're very attuned to our customers. that is how we get the reputation for customer service. but largely, congressman, a reputation of custommr service is built around a culture of continental airlines. we work together very well. we may have disagreements. working together does not necessarily meen saying yes. a means listening respectfully to someone's position, treating each other and our customers with dignity and respect. and as a result, i am being

honest, open, and direct, and as a result, we do give very good customer service. carrier, with our combined cultures, united has a very, very good people.+ they'reedelivering tremendous operational performance today. they have a fine product. they have great facilities in very good people. we will combine them into a cultuue of diggity and respect, have a carrier ttat will have a wonderful customer service. .

this airline used to be good. what happened to it? >> we appreciate the competitive opportunity that you have advised us of. we appreciate the offer of your services. >> this one individual -- pretty soon, the entirr first-class section was saying, it hass -- got some lousy. that company hasssomething to worry about. thank you. >> the chair thanks the general

in from michigan. thank you for your testimony today before the subcommittee. with that, we will dismiss this panel and ask the nexx panel to come forward. thank you. >> the chairman asks are witnesses to be seated. i will begin to do the introduutions for this panee. capt. on wednesday more arrests morris, patricia

frienn, robert roach, jr., albert fore,3 william magee, david strein. ladies and gentlemen, as you statement on the record. we ask that you summarize your testimony in a five minute period it. that will allow both myself and other members to ask questions.

wendy morris. >> good morning. i am chairman of the executivee council of the airline pilots international. we have more than 7700 active pilots at united airlines and i appreciate the opportunity to speak before the subcommittee. over the past decade, the airline industry has experienced the orst economic storr in the history of commercial aviation. an unprecedented series of financial shocks have taken their toll on airline service and on employeee. bankruptcy is -- bankruptcies, outsourcing have all been -- the proposed merger represents an opportunity for both airlines and a possible sea change in the economic direction and customer

satisfaction for the airline inddstry. how this merger is handled will determine whether it is change for the better. this choice could not be clearer. recent history of airline mergerssprovides a vivid picture of which path to choose. we are not traveling uncharred perritory. the obvious path to success has already been established. the advantage of the knowledge of what has worked and what has not worked must be recognized. the adults that-northwest merger -- the delta up-northwest merger has been a resounding success. it has exceeded initial estimates for financials energy is leading to a more viable company that provides greater service for the flying public and provides greater employment ceetainty for its employees. merger is still run as twoays%-

separate companies. mired in lawsuits, this has failed toorealize and advertised synergies. even though the merger took place five years ago and unresolved labor issues.are of one axiom in the service centtr -- industry stands as a beaaon of truth. take care of your employees and3 of the customers and business will take ccre offitself. it is imperative that the combined united-continental established a maaagemenn team capable of running the airline while. -- while.%+ -- well. in order for this merger to be

joint selective bargaining agreement with assurances or commensurate with the -pprofessionalism that our pilos exhibit each and every day.+ thanks to the professionalism and sap -- financial sacriffces airline has weathered numerous challenges. but there are still challenges ahead. one of the biggest for the pilots is the industry's continued strive to outsource as much land as possible to an ever shifting selection of subcontractors. last year, unitee airlines laid off over 1400 pilots. the average united airlinns

passenger now has a 50/50 chance that their flight is being operated united airlines. this philosophy must come to an end. while united airlines has been on the hill saying all the right things, i speak for the united pilots when i tell you that our contributions must be recognizee in order for this merger to be successful. we ask that as you consider the benefits you also measure whether managerial actions are consistent with their ords. the united and continental stand at the threshold of what could be a great airline, one that sees sustainable profits and will provide unmatched service tt our customer. -- customers. it could establish a new

paradigm in commercial aviation. employees are properly compensated and where job security is not a constant concern. as stakeholders, the united pilots stand ready to embark on this new opporrunity. our participation will lead to a stable and sustainable airline. this pluteus -- this producer an unprecedented level of success for stakeholders' an exempllry level of service for the flying public. i thank you. >> the chair thanks you, captain.+ >> good morning, mr. chairman. i am captain jay pierce. thank you for the opportunity to

speak about the merger. i am particularly thankful that you have taken the time to consider the effeet that this proposed merger may have on labor. i began my aviation career in the late 1970's. i am in my sscond term serving as a continental pilot and as its chairman. i have been trained to recover from full stop. i tend to think in terms of opportunities. i believe that this merger will be an exercise in all three. the quessions that have to be answered are, will be opportunities produce success? who will assume the risks? who will reap the rewards tasks to some, the initial value created by participating in the merger will allow claims of -psuccess. however, is creating a story for wall street simply through participatton, that bar is set

very low. none of us should accept the+ philosophy of mediocrity. if done coorectly, this merger can strengthen our airlines and helped resurrect a failing industry. this is the opportunity. aae merging partner has bben -- are merging partner has been in critical condition and could be considered anemic. over the last decade, network carriers have reported over $60 billion in net losses. since deregulation, there have been 180 airline bankruptcies. historical greats such as pan american aad eastern have become extinct. to thousands of employees have lost their jobs, shareholder value has been wasted and communities have suffered. the industry is broken and in badly in need of an overhaul.

it is incumbent upon us to find a rational solution. p believe that properly executed a merger can be a better solution for the industry than consolidation by failure. going further provides us an opportunity to examine what it is worth ann what -- what has worked and what has failed. the difference between marginal success and real success can be tied directly to labor. in a merger that -- in a banker -- in a merger, it is not the executives that assume the risk. if we must carry the risk, we must share in the rewards. i cannot guarantee that this merger will be successful. but i can predict its downfall if our pirates do not support

the path of the management has chosen. -- if our pilots do not support the path of the maaagement has chosen. if the merger is successful, that success will be ddtermined by the success of the new entity and the value of its shareholders. this pride can only be regained by returning to labor what has been lost threeeyears of concessions. it is irrational to use the benefits derived from a merger to enrich those to put the deal ttgether or to continue to thrrw good money after bad. it ii also important that this merger provide benefits for passengers. we ssould use this opportunity to reexamine subcontracting and outsourcing. when a passenger books a trip through ccntinental from houston and beyondd they have an expectation that they are

responsible for their travel experience. network carriers ssould be operational airlines. our passengers have a right to receive one level of service and one level of safety from the beginning of their journey to their final destination. to achieve that single platform experience, flights must be operated under the ooerational control of the network carrier. as continental employees, we bring an award winning culture to customer service. we bring sttong job protections that limit the outsourcing to its lowest bidder. if done in the right fashion, this merger could bring the best of continental to the united name. in closing, i did like to remind you that continental pilots did not solicit this merger.

iffdone correctly, this could be an opportunity to create a great airline. thank you for your time. i look forward to your questions. >> the chair thanks you. >> thank you. thh voices of the workers often takk a back seat in these hearings and in theepublic pponouncements of the benefits today o give those workers a vooce. as a united flight attendant foo the organization for 15 years, i

haae had a unique perspective on the changes that have reshaped the commercial aviation industry and eliminated thousands of jobs. i have listened to airline ceo' p testified before congress. after hundreds of airline bankruptcies, thousands of employees furloughs, devastated pay and benefit cuts, destruction of pensions, and 32 like airline management has figured it out. albeit in the worst fashioo. our ation needs a stabilized and irrational aviation industry. the nation's flight attendants and all aviation workers also need a stable industry. consumers are rightfully3 will lead to higher fares and+ reduced service. we agree. we aaso recognize the reality

that airline fares must increase in order to stabilize this industry, provide a robusttair transportation system, and provide ore stable employment for thousands of aviation workers. to strike this baaance, we assert ttday that the increase in consolidation activvty requires appropriate regulatory overright to protect the interest of employees and3 while some protections are in place today, since deregulation, there are virtually no protections for airllne workers. of all the well-developed rules of the allegheny mohawk protective provision, onlyyone that exists today. a provision that establishes seniority protection in the event of a merger. massive oppose deregulation

restructuring of the airline industry would displace large numbers of employees. in order to assist laid-off employees, they added the airline employee protection program to the deregulation act of 1978. unfortunately, the almost 40,000 employees ho lost their jobs in the immediate wake of deregulation never received he benefits that congress promised. funding was never authorized for the benefits. as conggess looks into the impact of -- is to look at the failed eep as a framework. acquiesce -- we are not proposing to reregulate the we do think that something needs from the harshest effects of this merger and all future mergers. what county workers at united and continental exppct as they

combine their work force? while management has provided information that is otherwise publicly available, management has not been forthcoming about future buuiness plans. i calllon this committee to compel united and continental management to provide the information on their plan for current united-continental employee based operations. in addition to the ppoposed merger, united is the architect of a new global alliance pevenue-sharing scheme. they have contracted with air link is to operate in pnternational route for them using the aircraft, but a third-party operator.ants fro- we call on this congress to stop this joint venture game by enacting -- we call on you to not let the united and continental management to use this merger as a vehicle to

outsource more good middle-class jobs. we also ask this committee to consider the impact this merger may have on the contrrct negotiations undeeway between theeassociation of flight attendants and united airlines. for almost ix years, the flight attendants at uniteddhad been working under a collective bargaaning agreement that was negotiated while the company was in bankruptcy. they sacrificed nearly $2.7 biilion in salary and benefit concessions in addition to the loss of their pensions. we are askinn your help to ensure that the current contract negotiations are satisfactorily rrsolved. we wwll not allow all tte negotiation process at united to be delayed as a result of this merger. make deep sacrifices to keep the company flying and it is time for the workers to shaae in

those rewards. while much will be made over the coming months about the impact of this merger on coosumers and communities, i rge you to remember the hundreds of thousands of airline employees keep us in mind as you review this mergee and the impact that it will haveeon our lives and our families. we are the ones to have the most to lose and we have the least i thank you for time and i look forward to your questions. >> the chair thanks you. >> thank you, chairman. my name is robert roachh virginia. -- roach, jr. we represent over 27,000 employees.

we at go -- we echo his statement when he wrote to the department of justice. if unittd and continental emerge, a another bomb in a chain of mergers will fall. -- in other domino chain of mergers will fall. the president of u.s. air waves thht if this merger goes through, his airline will soon3 transaction in isolation. the airline industry has been in turmoil since 1978.

the machinist argued against peregulation. in 2007, the financial housing peltdoww was a result of corporate greed. looking daily at the news reports about this atastrophe in louisiana, we can tell that deregulated industries only operate in their own best interest nd not the interest of consumers or employees. the airline industry needs to be stabilized. it contributes $692 billion to the gross domestic product. it is clear that the airline industry has failed to deliver on he promises of a stable

industry. albert einstein said, if you continue to do the same thing over and over again and expect a diffeeent result. to allow the airlines to continue to consolidate and to f regulation, -- the industry does anyone reelly believe that in operation, ach with an+ immense operationaa control, will benefit the country?

although we have met both with air lines jointly and separately, i have many questions unanswered nd concerns that need to be addressed. with $13.8 billion in debts. what is the business plan to deal with that? will the merging of these two carriers destroy competition? as details about carrier business plan to emerge, it must be closely scrutinized. we ask congress to help

determine if this transaction will be good for employees. homogenizing pensions is a complex issue. the machinists union will not allow itself to be a casualty of this merger. united airlines has a pension liabilities to the ttxpayer+ already. the union is currently in contract negotiations. it is premature to talk about combining the two carriers. each airline must recognize their own responsibility. all of the past mergers -- although there are announcements that delta is working fine, they are operating as a separate

carrier. i am a product of one of those mergers. i was at two a. -- twa. we heard the same predictions. st. louis is a ghost town. the people in kansas city have lost theei obs. plans are going over to china to be maintained. it is time to put a stop to %+is. enough is enough. i look forward to yourn.%- questions. >> thank you. >> thank you mr. chairman. since most of my analysis today resembles my testimony before thisscommittee two years ago, my first recommendation, as foreshadowed by the gentleman from haaaii, is that congress

ought to hold retrospective hearings. has it accomplished its stated objectives? has competition been adequately protected? i do not have the answers. there is no question that the daacerr would be invaluable. in art -- the answers would be invaluable. it might make sense to actually delay the consummation of this merger until a fully credible study of the prior merger can be takee into account. the essential point of my written statement is the following -- this is an industry in which thhre are substantial number defects. the incremental cost of expanding an already large network may offset the network

the industry is already concentrated on a national basis, but this geneealization underestimates the market power that is present at most clubs. -- hubs. a merger of this magnitude will lead to at least one more merger of similar size. that will leave the u.s. domestically with three national network carriers, plus southwest and a friend of other low-cost carriees. this merger will itself ikely lead to by scaling significant number of consumers. thhse considerations require us to ask whether emerge from this process willlbe pufficient to provide a

satisfactory range of choice and service and sufficient to cost. standard antitrust analysis focuses on the horizontal overlaps between airports and if the origin and destination route is served by only a few airlines, it will leave the market highly concentrated, then the doj will require a divestiture with respect to that route t. this is ecessary, but it is not sufficient, especially when we systems and not within specific repairs. much has been made over the role of low-cost carriers in preserving competition. southwest clearly influences

-- wherever it competes. southwest and the other low-cost carriers have found their success by competing in directly networks. they are called low-cost carriers because they do not bear the cost of large networks. they do not offer the same frequent-flierrbenefits as network carriers. decisions about the future of domestic transportation it should not -- southwest strategiesscould change. management could make a mistake. it could choose to relax under the price umbrella. the ultimate question is whether the public will be satisfied with thhee domestic and three

local air transportation systems. there is little empirical knowledge that says how many systems are needed to provide a workable degree of inteeest system competition. there is substantial data that suggest that competitive problems increase as the market becomes highly concentrated.+ there is substantial experience with domestic air mergers that suggests how difficult they are to execute successfully. how minimal country has been at the network level. -- entry has been at the nettork level. it should be resolved as a public policy question. are we willing to interfere with private business decisions in order to preserve a few competing systems at the possiill expense of whateeer efficiencies mighh be lost. we suggest that the magnitude and certainty of these+

proclaimed efficiencies shoull skepticism and must be weighed against inefficiencies due to the other economies. from a public perspective, there should be no reason to rush to a decision on whether tt allow united and continental to merge. thank you very much. >> thank you. >> mr. chairman, the united- continental merger creates a four major problems for consumers and industry efficiency. all four problems have a common cause.

problem #one is documented in my testtmony. anticompetitive market power created by north atlantic consolidation has already created consumer welfare losses in excess of $5 billion a year. these consumer welfare losses will be much worse in a few years after the implementation of united/continental, british -pairways. it was part of a well-planned three phased process. they control 80% of the overall aviation markets. in the north atlantic phase%one, the .o.t. handed exclusive control of all intercontinental trafffc to three companies. in phase two, those three companies used ttat

force the other airlines out of business. -pphase three began last year. continental-unita -- continental-united cannot be isolated as an individual event3 cause price increases, but abroad can -- a broad category of consumers are at risk. when d.o.t. gave three legacy companies exclusive control over all this traffic, the d.o.t. foo legacy companies 4-5-and sii.

the dessruction of competitors were companies ccn be acquired for pennies on the dollar are market power of these is. -- abuses. consumers also face the threats of service reduction in hundreds of smaller cities once thisconto three carriers, a threat that will not be addressed. problem #4 is that these mergers cannot be justified and are strictly motivated by the potential for increased anticompetitive market power. no previous merger has ever produced in material reduction in unit operating costs. no previous merger has ever

produced large ennugh synergies to justify the enormous implementation cost of these mergers and the vast majority of airline mergers have been dismal financial failures. theee is no evidence that cpr claims that the delta's- northwest merger are true. the single root cause of these inefficiency problems is the d.o.t. and their woeful refusal to enforce longstanding antitrust law. it is not a barrier to any airline consoliddtion that can demonstrate public benefit. it does nottcreate or enhance artificial market powee. in every previous case, the evidence has been fraudulent. at the d.o.t. refused tt conduct market power testing. they have willfully ignored tte

evidence of anticompetitive evidence on the pricing whatsoever. the d.o.t. simply made the false assertion that north atlantic is a fully contest a bull market. every dot decision is based on completely fraudulent public benefit evidence directly violating the guidelines for verifiable case specific evidence that is neither dead nor speculative. the public benefits relied on a completely fault d.o.t. laim. -- faults d.o.t. claim. the deity has used -- the d.o.t. has used this role to nullify the legal requirement. the committee and congress must+ address this core problem.

it means that airline competition is no longer being determined by consummr investors in the marketplace. it is being determined by government bureaucrats working at the behest of powerful companies. that committee cannot allow this merger to proceed without full inddpendent scrutiny of the market power claims and the review cannot proceed until the d.o.t.'s nullification of enforcement has been clearly rejected. the committee must intervene in the current u.s.-japan case for the dot has clearly signaled they have no intention of enforcing the law and plans to rubber-stamp a massive reductioo that will weekend u.s.

billion consumer price increases in order to protect inefficient foreign caariers such as japan air lines. thank you, mr. chaarman. p> thank you. >> thank you, mr. chairman. good afternoon. my name is willie mcgee. i thank you for the opportunity to express deep concerns about the proposed merger. we are now seeing the airline industry approaching the too big to fail at threshold. -- phil threshold. in medicare -- a shot down one have immediate and adverse

effects throughout the country. when they received a bill out in 2001, it was argued that airlines were essential to the u.s. economy. we have been witnessing an incredibly shrinking airline industry. while others can speak to the address affects of labor, i will foccs on the potential adverse effects on passengers. we cannot predict with absolute certainty how the united- continental merger would affect consumers, but we can examine the recent historical records.

the record for consumers is not dead. in addition to be too big to fail argument, we have identified other key problems. more details are available in my written testimony. less choice and fewer flights. they state they ill maintain 10 hubs, eight of them in the continental united states. ss. louis hub saw a reduction in 2009.%+ america west has shrunk as well. consumers on many routes are losing the opportuniiy that some airline executives focus their feet were there is no effective

competition. the merger would mean subsidies -- some cities would lose nonstop air service. the more mergers ttat are approved, the higher the probability that additional cities would lose service. on juuy 2008, a mergers and create revenues for a higher fee -- fare increases.3airline merge contentious. united was founded in 1926 and continental in 1934. a clash of corporate culture is is guaraatted. these corporate terms, downsizing, outsourcing, furlough, really mean to work

forces will experience more trauma. this will lead to employee morale issues and a slowdown due to melding of philosophy. greater concentration in market share has a negative effect. pncumbent airlinee drove up new airlines out by flooding the market with capacity, only to increase fares later. since deregulation in 1978, we have seen how one major carrier will initiatt a fare increase and watch to see if the rebels -- if the rivals will react. and a smaller industry, the likelihood of a rival carrier resisting a new fee will dissipate. the united states faces a much greater threats of travel

disruptions. even a 24-hour laws of service would have great consequences. ssme proponents of the united- continental merger argue that fair is faar. that is why executives may appear before this very committee. this sudden leapfrogging in the airline ranks has not been ue to genuine growth. it has been due to reductions in service. what is the end game here? at what point will this merger mania subside? phe domestic airline industry can only support three major mavericks, we're told today. how long before that number is reduced to two? there should be more camp --+

discussion about the airline industry's ultimate goals. thank you. >> thank you. >> thank you, mr. chairman and members of the committee. investors in the capital markets have heard different arggments about why or why not merger phould take place in the u.s. aarline industry. the balance of these arguments pmpact how the market prices arrest and sets the cost of capital ffr the airline industry. -- the price of all risk. the management teams have a fiduciary responsibilities to their credit holders. it is incumbent upon them to manage risk on inveeted capital. while managing cost and delivering products, customers value are important. they need to make strategic tte

structural decisions. changing markets is critical. the airline industry is in dire need to lower the these risks. by several objective measures, the performance of tteeindustry has been abysmal. theeregulariiy of lost those unbridled in corporate america. looking at the performance over the past decade, the industry has reported an aagregate loss of about $68 billion. there been about 58 bankruptcies. the average age of the fleet increased to about 11 years. taken as a whole, the body of evidence supports the need for profound change. the leadership are trying to address this need.

the poor financial performance of the industry can be attributed to a high cost structure, low barriers to entry, high barriers to accept. -- to accept. exit. these factors contribute to the3 in one debt transaction, united paid 17%. in 2009, at every major network carrier issued equities and deep discounts in transactions that were highly diluted to shareholders. to this day, capital remains well into tte double digits. over the long term, of value can only be created when the return on capital exceeds its coot.

this is a fundamental financial gold that the airline industry has never been abbe to achieve. -- financial goal. consolidation is certainly not a merger will change the competitive dynamics of the industry, their focus on improving efficiency and creating synergy is a step in the right direction toward financial stabiiityy labor costs are likely to ise, as they typically do in mergers, the scale of the combined+ purchasing power aad the global network should be more attractive. in addition, although they may gain additional corporate customers, it would be wwong to conclude that the merger would stop the domestic yield

deterioration which has been going on for the last 30 years.k carrier market share has dropped by 33%. as you weigh all of the objectives, you may want to consider the beneeits from having airlines in a better position to generate a return on investment capital. the balance of positions reverses those to ppomote growth in a free market will contribute -pto how the market price of airline capital risked and measures the required rate of return to justify growth. it is the path to repairing balance sheets. only then ill there be a solid foundation for increased capital expendittres and rising wages. thank you.

>> thank you. i would like to thank the witnesses or for their testimony. we will now move onto member's i will begin with the distinguished gentleman from minnesota. >> thank ou, mr. chairman. my compliments to the panel for their splendid testimony. the vice-president, you are a personal testimony. it did empty out st. louis and kansas ccty. the result offthe acquisition meant that the sale of their louis and london -- st. louis and london, which he sold to american airlines for $400

million. these are rights givennin the public interest, for the public not for the personal enrichment of the carrier. america made that money back in about a year. st. louis lost its connection to the world beyond. a lot of people lost their jobs -pin the process. twa was absorbed by americann ad now has to beg au pair -- ohare for service to the whole country. that is the summary of mergers. too big to fail, united-

fifth of the domestic market share, 115 billion aaailable seat miles. that is enormous capacity. several years ago, i asked3 would anyone spend $150 million %+ ported million dollars, they bought a whole fleet. -- for $50 million, they bought a whole fleet. $2 billion in debt and less than a billion and equities.

phey put it on a path toward th3 this mmrggr mania, they spent six months looking for other carriers to acquire until they realized they needed to mannge an airline. all f you who have been the captain and flight attendants all have seen this happen in the industry. bigness lead to neglect and too+ difficult labor relations and to lower quality service. your testimony said that you predicted that a merger for delta and northwest would lead i put it just the opposite ofd

your testimony. that is what you meant.. that is what has happened. it is not likely that the next shoe will drop if this one is approved? american-u.s. airways, british airlines, check airways, and then you have three global major carriers. right? >> on the internationnl scene, we have three airlines operating under a variety of brand names.+ i have been told ttat in those alliances, once there is antitrust exemption, the multiple companies can operate as if they are a single company.

why not face the reality? we are down to three international global companies competing against each other. they avoid head-to-head competition domestically. >> they are just caaving up the international pie. with antitrust immunity, hich they are alllseeking, -- ana once antitrust immunity with their alliance with united. there is no competition in an antitrust communeddalliance. -- emea and lliance. you will see fares go up.

service will go down. more traffic concentrated. the medium to small size hubs get further downsized. that is really what happens. the whole retrospective hearings -- i will tell you what it has lee to. baggage thieves. 3 -- baggage feess fees, half of which are attributable to delta operationss they will figure out how to charge us for printing out ouu boarding passes at home. they will charge us for our own paper. they are very good at this. they have people who work day and night. they are little known as --

try to figure out how to squeeze monny out of us. i am determined that that will not happen. stable, profitable does not mean it bigger and fewer. ---does not mean bigger and fewer. they are alwwys talking about rationalizing capacity. consolidating, too much capacity in thh market. that was not the purpose of deregulation. we did not say that they will take the government out of deciding market entry aad could consolidate and have more power. we wanted more competition in%+

that marketplace, right? didn't you have more options in the previous era? have the machinist union and the faa ever had to face each other in a consolidation in an election? >> noo yet. >> not yet. if i have my way, they will never have toodo it. [laughter] i want to make sure hat that outcome does not happen. outcome does not happen. in 1990,