For some lawmakers, the question of whether United and Continental should be allowed to merge comes down whether either airline will be able to survive alone.
For the chief executives of both airlines, it all comes down to what constitutes survivability.
"If this merger is approved, our passenger aviation system will have one less global network carrier, and I am not certain if this is good or bad, but it is increasingly clear that the current structure is not financially sustainable," Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller (D-W.V.) said at the start of his committee’s hearing earlier this month on the merger.
Most industry analysts and experts agree that one or both of the airlines will wind up in Chapter 11 bankruptcy protection within months or years, especially if there are any more economic surprises, although no one is predicting that either would be forced to liquidate.
If fuel prices spike or there’s a double-dip recession, the airlines will probably have to restructure, Daniel McKenzie of investment firm Hudson Securities told Senate committee members.
That’s not the kind of existence that either airline CEO wants for his company.
"It will be a daily struggle as far as I can see," said Continental CEO Jeff Smisek. The airlines need the merger, he said, to secure their future.
United CEO Glenn Tilton said bluntly, "Bankruptcies are not in the public interest."
United has some experience with that. The airline operated in bankruptcy from 2002 until 2006.
As lawmakers noted during this month’s hearings, bankruptcies have become alarmingly common in the airline industry. There have been 162 airline bankruptcy filings since 1978.
There have been about 40 bankruptcies since 2001, and U.S. airlines have lost a total of $60 billion since 2001, Smisek and Tilton said.
And the last two years have made other bankruptcy filings even more likely, industry experts say.
Susan Kurland, assistant Transportation Secretary for Aviation and International Affairs, told Rockefeller’s committee that 2008 and 2009 "were some of the most challenging years in the history of U.S. aviation."
"The global recession helped push operating revenues for the nine largest U.S. airlines down an unprecedented 17% (in 2009)," she said.
Continental lost $282 million last year, Smisek said, and the airline has lost about $1 billion since 2001.
Still, under grilling by lawmakers, Smisek and Tilton acknowledged their airlines would still be able stay aloft if they were not permitted to merge.
But they presented a scenario under which both airlines, unable to compete in the international arena, would lose more and more market share to other global carriers.
United and Continental would also become weaker domestically, the executives said, as low-cost carriers continue to expand and pull down fares.
Eventually, Tilton said, low-cost carriers like Southwest would become domestic feeders for international airlines serving the United States.
Also, Smisek and Tilton said, as standalone carriers they would not be able to weather the next big economic or industry "shock."
The airlines can’t be sure from which quarter the next industry shock will come, Tilton said. "One thing everybody knows: It’s coming," he said.