Analysts: No immediate effect on McCarran

United Airlines' planned $3 billion buyout of rival Continental should not have any immediate impact on service at McCarran International Airport.

According to the airport's website Monday, the two airlines did not compete in the same markets for passengers traveling to and from Las Vegas during April.

However, Wall Street analysts worried cutbacks after the buyout is completed -- which will create the world's largest carrier with a commanding position in several top U.S. cities -- could lead to the elimination of some airline service.

The new United would surpass Delta Air Lines in size, which should help it attract more high-fare business travelers. It will fly to 370 destinations in 59 countries.

The companies insisted the deal is a merger of equals, but United shareholders will hold a majority stake. The airline will be based in United's hometown of Chicago and it will be called United.

Analysts said it will take time to determine how the merger would affect service in Las Vegas.

United, which became McCarran's No. 2 air carrier this year, flew 187 outbound flights per week from Las Vegas with 47 going to Denver, 46 to Chicago's O'Hare, 28 flights to San Francisco, 25 flights to Los Angeles International and 21 flights to Dulles in Washington D.C.

Continental had 114 outbound flights per week during April, including 51 to Houston's Bush International Airport, 41 to Newark, N.J., and 22 to Cleveland.

Without duplication between cities, in the interim it seems that nothing will change.

"There doesn't appear to be any notable overlap in the routes of the two airlines, so it's highly doubtful we'd see any capacity cuts from the combined airlines for that reason," said Union Gaming Group Principal Grant Govertsen.

Analysts have expressed concern that lack of airline capacity into Las Vegas is hurting hotel occupancy.

Las Vegas added almost 6,000 hotel rooms at end of the last year, including the 4,004-room Aria within the CityCenter development. Airlines have cut service in the past year due to high fuel costs while the recession has shelved travel plans by consumers. McCarran's passenger counts are down 3.5 percent through March following an 8.2 percent dip in 2008 and a 7.7 percent decline in 2007.

"Once integration occurs, the airline might look more closely at some flight reductions," Macquarie Securities gaming analyst Joel Simkins said Monday.

Simkins also follows Las Vegas-based air carrier Allegiant Airlines, which serves smaller, regional markets to and from McCarran.

"Las Vegas is one of the markets that is least likely to add back capacity because it's a high-volume, low-margin market," Simkins said. "There is not a significant amount of long-haul business."

Simkins said airlines would rather operate routes between New York City's John F. Kennedy International Airport and Los Angeles International Airport.

United became McCarran's second-largest air carrier this year because of cutbacks by Tempe, Ariz.-based US Airways. However, United still trails Southwest Airlines, McCarran's No. 1, which carries almost six times the number of passengers as Southwest.

Allegiant was McCarran's sixth-busiest air carrier in March with Continental close behind.

"Allegiant believes the airline industry consolidation would be positive with regard to the removal of capacity from the industry," Simkins said, but airline executives thought the buyout would involve US Airways, which might have given Allegiant a bigger share of the Phoenix market.

Govertsen said United's buyout of Continental was not expected to close until the end of the year when the economy could be showing some marked improvement.

"In such a case it would make sense that there would be an increase in visitation to Las Vegas and airlines would be adding capacity back into the market," Govertsen said. "That would clearly apply to all airlines, not just the combined United-Continental."

The new United would be run by current Continental CEO Jeffery Smisek. United CEO Glenn Tilton, a longtime advocate of consolidation in the airline industry, will be non-executive chairman for up to two years before Smisek adds the chairman title.

The new parent company will be called United Continental Holdings Inc., and have about $29 billion in annual revenue based on 2009 results and $7.4 billion in unrestricted cash. The airlines said combining would save them $1 billion to $1.2 billion a year by 2013, including between $800 million and $900 million in new yearly revenue.

The deal would create a giant with major hubs in key domestic markets including New York, Los Angeles, Chicago, Houston and San Francisco and an international network stretching from Shanghai to South America.

The Associated Press contributed to this report. Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.