United,Continental Face Skeptical Feds

WASHINGTON (TheStreet) -- Members of Congress grilled the CEOs of Continental(CAL) and United(UAUA) on safety issues Wednesday, and the two executives stressed the need for a merger to bring financial stability to a historically unprofitable industry.

The CEOs also faced tough questions regarding network carriers' limited oversight of safety practices at regional carriers that fly under their names. The issue was brought about in the aftermath of a 2009 crash of a Colgan Air plane that killed 50 people. The plane was flying as Continental Express.

Continental CEO Jeff Smisek and United CEO Glenn Tilton appeared before the House Transportation Committee's subcommittee on aviation. In contrast to the hearing last month before the Senate Judiciary Committee's antitrust subcommittee, the tone was harsh.

To an extent, the tone reflected the view of Rep. James Oberstar (D-Minn.), the chairman of the House Transportation Committee. "This is a terrible, awful no-good thing," said Oberstar, summarizing his view on the proposed merger at the hearing's conclusion. "The Justice Department ought to turn it down and I will do everything in my power to make that happen -- this is the very antithesis of deregulation."

Earlier, Oberstar declared that airlines "work night and day trying to figure out how to squeeze more money out of this turnip they've got in their hand, and I'm determined that won't happen." He said airline industry consolidation has led to fewer carriers, higher ticket prices and fewer jobs. If the merger is approved, Oberstar will introduce legislation to step up regulation of the airline industry, he added.

On the safety side of the argument, Rep. John Boccieri (D-Ohio) and Rep. John Garamendi (D-Calif.) focused on the relationships between the contract carriers. Boccieri asked Smisek why the Colgan Air pilots had not been trained to recover from an aircraft stall. "That is your responsibility," he told Smisek.

Smisek countered: "No, it was not. We were not aware of that training deficiency. That is the responsibility of the [Federal Aviation Administration.] We did not train those pilots," Smisek reiterated. "We expect them to be safe. We expect the FAA to do its job."

Boccieri responded: "We expect you to do your job too, sir."

Smisek said Continental is committed to safety and deeply regrets the fatal accident, but reiterated that the airline, with limited resources, can't be responsible for the safety of all carriers.