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Delta-Northwest Merger Ok'd....


wxman

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Fresh from the printer...

http://www.chron.com/disp/story.mpl/front/5697457.html

Lot's of questions here guys. Any answers would be appriciated.

What does this mean for Houston's Continental Airlines? Are we likely to lose out of the United-Continental merger...if such a thing were to happen? IAH just announced a multi-billion dollar expansion of terminal B. Would this be put on hiadas? Looking at other airports around the nation, Pittsburgh and St. Louis were once hubs and lost out due to mergers and now their airports are little more than landing strips. Is this Houston's fate?

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Fresh from the printer...

http://www.chron.com/disp/story.mpl/front/5697457.html

Lot's of questions here guys. Any answers would be appriciated.

What does this mean for Houston's Continental Airlines? Are we likely to lose out of the United-Continental merger...if such a thing were to happen? IAH just announced a multi-billion dollar expansion of terminal B. Would this be put on hiadas? Looking at other airports around the nation, Pittsburgh and St. Louis were once hubs and lost out due to mergers and now their airports are little more than landing strips. Is this Houston's fate?

No to the entire post.

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Next Up: United + CO. CO execs are probably working tonight, plotting their options now that they can cut the umbilical from NWA. I predict there is a 95% chance of this being announced within 14 to 28 days - max. And anyone who works at ANY US airline will be looking to jump ship, seeking better opportunities in an industry that HAD to change (oil/jet fuel is just too expensive). United's CEO has been trying to sell them out for a while now, so I am told.

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I have never quite understood the logic by which Continental and United feel they are "forced" to merge when Delta and NW do. I-bankers talking, I suppose.

There has been no reliable word at all as to who would head up a potential Continental-United entity or where headquarters would be. Houston will certainly remain a hub, not just a landing strip, but beyond that all bets are off.

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The news said that if Continental and United merged, it would create the largest airline in the world. So the merged airline would have to be based in Houston, you know, for bragging rights, having the HQ for the world's largest airline. Then I think American should merge with some smaller airline to create the worlds second largest airline, then TX would have the HQ of the two largets airlines. All for bragging rights of course.

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IAH will be a major hub no matter what (top 3 in the nation now for nonstop destinations and flights/day). Terminal B expansion will continue. The buzz on the boards is that Continental has a much more highly regarded management team and operations, which gives good odds the HQ will stay here. Easier to cherry pick good UAL people and move them here than move CAL's people in-mass to Chicago. That said, there is a modest chance the operational HQ will stay here, but they'll set up a thin, official, executive HQ in Chicago - sort of like Boeing does there or Exxon does in Dallas. One of the drivers would be United's recent incentive deal with Chicago and Illinois to locate their HQ downtown, with penalties if they leave. That would be an unfortunate outcome, but in terms of real economic and jobs impact on Houston, it would be minimal. But I have high hopes it will all be here, and it would be pretty cool having the HQ of the world's largest airline.

Our alliance would shift from SkyTeam to the Star Alliance, which means more flights to Germany and fewer to Paris and Amsterdam. United does do a little hubbing out of Tokyo, so hopefully that flight would stay even without the SkyTeam Northwest connections.

More thoughts and links here:

http://houstonstrategies.blogspot.com/2008...-jobs-boom.html

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I have never quite understood the logic by which Continental and United feel they are "forced" to merge when Delta and NW do. I-bankers talking, I suppose.

There has been no reliable word at all as to who would head up a potential Continental-United entity or where headquarters would be. Houston will certainly remain a hub, not just a landing strip, but beyond that all bets are off.

Even though United is Chicago's hometown airline (actually it only moved to Chicago last year from suburban Elk Grove Village), it's not very much liked. If there's a United-Continental merger, pray that Continental gets the upper hand. Continental has a nicer headquarters anyway.

Continental:

1205013616.jpg

United:

1158883566.jpg

Now... back on topic:

It looks like Delta will have the upper hand in the Northwest merger. HQ in Atlanta and they're keeping the Delta name. Shame, too. My very first flight was on Northwest Orient. It'll be great for Delta, though. It'll give it a huge presence in Asia and the northwestern United States. The problem is that Delta wasn't really a great airline to begin with. Nearly adequate, but not special.

I don't see a lot of layoffs coming because Northwest and Delta don't have a lot of overlapping routes, though I bet we'll see those KLM codeshares to Amsterdam evaporate.

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I've heard that United is a total mess. If this merger happens, maybe Continental will obtain their jets and routes and retain their headquarters here. Cost of living and cost of doing business gives us an advantage. I'm just speculating here.

I'll ask my "Continental Friend" his opinions if I see him this evening.

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You know, as long as the HQ of what would be the world's largest airline is in downtown Houston, I don't really care what they call it. I could see United wanting at least a bone thrown their way if the HQ is in Houston, such as keeping the "United" name. If the HQ is in Houston, and the Continental managment takes over, and the name is Continetal, then it doesn't really seem like a merger, more like Continenal eating United. This is a stupid question, but if that did happen, and it's like United no longer exists, would that free them from the contract with Chicago, the one where they have to stay for 8 years or something like that? Would Continental have to pay the penalties for a company that no longer exists? I really don't know much about this stuff. Could the city of Houston pay Chicago the penalties to ensure the HQ was here?

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What I saw on CNN yesterday was...

CO and UAL merge.

CO will manage the new company.

The new company will be named United.

HQ to be in Chicago.

...what I saw on television...

Can't find it searching the CNN web site, both text and video. Do you have a link? Was it a reporter, or some analyst taking a guess?

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I've seen different.

A lot of industry insiders are saying the HQ will stay in Houston (from SkyscraperPage). Chicago can't match a friendly Texas business environment.

Aside from Chicago's corporate welfare, it is also a union town. United's unions may not be very happy with the prospect of a move to Houston, and since they're the bigger company in terms of staffing, their unions would probably have the upper hand.

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Fwiw - and I would say it is close to nothing - my friend at Continental says Continental's CEO gets the nod, but Chicago gets the HQ. At this point it is all speculation, but if Houston wants to keep the headquarters I would suggest they get busy now loading on the incentives. Chicago certainly will.

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Can't find it searching the CNN web site, both text and video. Do you have a link? Was it a reporter, or some analyst taking a guess?

Ali Velshi was talking about it. I think on their morning show... Keep hearing that United will be the new name, HQ in Chicago... Chicago already has incentives in place... Houston????

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Houston keeps its hub. Houston (CO) managment gets to run the show - from Chicago.

Houston always loses out on these mergers. Look at what happened to Compaq. They said the headquarters would move to California, but even more jobs would come to Houston, but we all now know that, that did not happened and Houston ended up being the loser in the deal. Houston should fight for this HQs. leting CO managment running the show in Chicago, how is that helping Houston? And Houston being a hub, thats not promised in Houston isn't Home to the airline. The people in Chicago may say forget Houston after the merger.

Houston's economy is doing better than the rest of the nation right now, so hopefully that will play a roll in where the HQs will be.

Edited by Subdude
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Aside from Chicago's corporate welfare, it is also a union town. United's unions may not be very happy with the prospect of a move to Houston, and since they're the bigger company in terms of staffing, their unions would probably have the upper hand.

The much bigger problem is that United's unions are much more confrontational than CO's. Continental enjoys a somewhat respectful relationship with its employees. United decidedly less so. The fear by many is that the logistics of integrating labor from the two companies will be like oil and water.

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As far as HQ goes, I say Houston for the merged company and Chicago for world operations. Especially since the Continental CEO will become the CEO of the merged company, and the United CEO will become the operational executive.

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Houston always loses out on these mergers. Look at what happened to Compaq. They said the headquarters would move to California, but even more jobs would come to Houston, but we all now know that, that did not happened and Houston ended up being the loser in the deal. Houston should fight for this HQs. leting CO managment running the show in Chicago, how is that helping Houston? And Houston being a hub, thats not promised in Houston isn't Home to the airline. The people in Chicago may say forget Houston after the merger.

Houston's economy is doing better than the rest of the nation right now, so hopefully that will play a roll in where the HQs will be.

Did we really lose out? There are 4 million+ in the city. Most of us have jobs. CO only employs 45,000 worldwide (i.e. there are less in Houston.) Both cities are going to have to compete for the HQ... Chicago already has tax incentives on the table. Last I checked... we had nothing. Surely, we can recover from that kind of loss, given the size of the city.

One thing that CO is good about is "brand image." Look at their advertising, consistent aircraft livery (vs. Delta's 3 different paint schemes). If CO gets the top management job... And United is the new name... Let's see how quickly CO management ensures, at almost any cost, that "Continental" gets stripped off, as soon as possible, from existing aircraft, and re-painted with a new livery (important to remove the crutch of clinging on to the old and getting on with the new). It will be their (CO's management) duty to bury the old image ("Houston's airline") as fast as possible - and perhaps do it from Chicago.

Change happens.

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There are almost six million people in the metro, and with Houston growing twice as fast, as well as Texas' business climate, why wouldn't they just keep it here? Like I said earlier, the United CEO will be chief of operations (something like that). Why not have him just stay in Chicago, and CO Management gets to operate from home (Houston).

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There are almost six million people in the metro, and with Houston growing twice as fast, as well as Texas' business climate, why wouldn't they just keep it here? Like I said earlier, the United CEO will be chief of operations (something like that). Why not have him just stay in Chicago, and CO Management gets to operate from home (Houston).

Because, perhaps - we don't need them (CO) to (stay). Per your own statistics, we'll be just fine. What you suggest (split management between Houston/Chicago) may persist... for a while. But why duplicate your costs? Pick one city or the other. The whole point behind merging business is to capitalize on economies of scale, meaning put in place a streamlined management structure over a wider area of combined company assets (aircraft, routes, etc.). That's how you get your cost savings. Paying a light bill both in Chicago and Houston makes no sense.

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If you ask me they would be mad to keep the United name, since the public associates it with customer service that borders on the abusive. Inasmuch as anyone has positive feelings about any airline brand, Continental seems to have a somewhat decent reputation.

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The much bigger problem is that United's unions are much more confrontational than CO's. Continental enjoys a somewhat respectful relationship with its employees. United decidedly less so. The fear by many is that the logistics of integrating labor from the two companies will be like oil and water.

BINGO.

As a 15 year loyal Continental flyer, I hate the idea of this merger. I spent 4 years connecting to upstate NY on United and I hope I never have to fly them again. The employees vs. management environment at UA makes flying a dicey prospect.

Bigger doesn't always = better.

My DREAM is for Continental to acquire Alaska Airlines creating a major West Coast presence and a Western Hub in Seattle. That would give CO a hub in Houston, Newark, Cleveland, and Seattle with major focus cities in Los Angeles and San Fran. Alaska is a quality carrier ala Continental and they have very similar all Boeing fleets. The corporate cultures at both companies are also way more positive than they are at United.

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My DREAM is for Continental to acquire Alaska Airlines creating a major West Coast presence and a Western Hub in Seattle. That would give CO a hub in Houston, Newark, Cleveland, and Seattle with major focus cities in Los Angeles and San Fran. Alaska is a quality carrier ala Continental and they have very similar all Boeing fleets. The corporate cultures at both companies are also way more positive than they are at United.

Alaska has resisted attempts at consolidating with other airlines. AFAIK Alaska prefers to codeshare with everyone else...

I agree that I do not want to see CO merging. I'd rather let United and US Airways merge.

Edited by VicMan
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BINGO.

As a 15 year loyal Continental flyer, I hate the idea of this merger. I spent 4 years connecting to upstate NY on United and I hope I never have to fly them again. The employees vs. management environment at UA makes flying a dicey prospect.

Bigger doesn't always = better.

My DREAM is for Continental to acquire Alaska Airlines creating a major West Coast presence and a Western Hub in Seattle. That would give CO a hub in Houston, Newark, Cleveland, and Seattle with major focus cities in Los Angeles and San Fran. Alaska is a quality carrier ala Continental and they have very similar all Boeing fleets. The corporate cultures at both companies are also way more positive than they are at United.

I like that. Only thing is, United as a strong Asian presence. Something Continental does not have right now.

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My DREAM is for Continental to acquire Alaska Airlines creating a major West Coast presence and a Western Hub in Seattle. That would give CO a hub in Houston, Newark, Cleveland, and Seattle with major focus cities in Los Angeles and San Fran. Alaska is a quality carrier ala Continental and they have very similar all Boeing fleets. The corporate cultures at both companies are also way more positive than they are at United.

Keep dreaming. Domestic air travel is a BIG LOSER, for all the "major" airlines. Major airlines (excluding Southwest - to me, they are a major airline, but save that for later), typically lose money on domestic (because they are competing with Southwest) - but make up for those losses on international routes. CO doesn't need more money-losing domestic coverage, anywhere, including the northwest. They'd rather trade that option for more international connectivity; hence, United... Alaska would only mean they would ahve to grow their Asian presence; something they get "for free" with a United merger.

Whatever CO decides to do - they better do it quick. Because per their own former CEO: "You don't want to be the last one, stuck to pick the ugly girl at the dance." Or something like that. That is, pick your best merger partner now, or else you'll be stuck with less than an optimal solution.

Edited by BryanS
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Add to that, United has hubs in San Francisco (SFO), Denver (DEN) and Los Angeles (LAX) already. Add to that United's strong Asian service, and that is the best choice for Continental. Just hope the HQ stays in Houston (have heard from someone highly-placed, that works in the HQ Downtown that Continental would like to stay in Houston every way possible, but business is not 100% guaranteed).

Edited by Trae
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Asia is a great market to get into but I would much rather see CO grow into that market indepedently.

CO just ordered two more 777s and have 25+ 787s on order. CO already flies to Tokyo, Hong Kong, Beijing, Delhi, Mumbai, and Tel-Aviv. Shanghai is coming on-line soon too. CO also has Air Mike operating a hub in Guam all over the Pacific Rim.

I just don't see how adding an ENORMOUS airline with multiple blemishes (recent bankruptcy, labor issues, credit rating issues, horrible public reputation for service, etc...) is the answer.

CO's biggest issue with Asia service is that some of the largest markets to Asia are found on the West Coast. Sure, "merging" with United would get them into those markets, but so would acquiring Alaska Air and creating their own Asian hub in the Pacific Northwest.

Continental has been working hard and flying right for years. They are about to that motto if they go ahead with the UA merger.

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Asia is a great market to get into but I would much rather see CO grow into that market indepedently.

CO just ordered two more 777s and have 25+ 787s on order. CO already flies to Tokyo, Hong Kong, Beijing, Delhi, Mumbai, and Tel-Aviv. Shanghai is coming on-line soon too. CO also has Air Mike operating a hub in Guam all over the Pacific Rim.

I just don't see how adding an ENORMOUS airline with multiple blemishes (recent bankruptcy, labor issues, credit rating issues, horrible public reputation for service, etc...) is the answer.

CO's biggest issue with Asia service is that some of the largest markets to Asia are found on the West Coast. Sure, "merging" with United would get them into those markets, but so would acquiring Alaska Air and creating their own Asian hub in the Pacific Northwest.

Continental has been working hard and flying right for years. They are about to that motto if they go ahead with the UA merger.

If they don't do "something" ... or should I say, they elect to do "nothing" and stay independent, then they will get squished like a little bug, in this post-merger environment. The new DL+NWA airline, and AA, will eat CO's lunch.

Just think of a merger with UAL as a home foreclosure type of deal: damaged goods, at a discounted price - something that once you acquire - you can go in and fix up, to your liking. Why build a new house (creating their own Asian hub), when you get a fixer-upper, in the exact location you're looking for (leveraging UAL's existing Asian network) at a "lower cost." This could be a gem of a deal.

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Seattle may work for a hop to Asia but wouldn't work well for domestic destinations as a feeder hub. From a travelers perspective, I would look forward to having a more western hub like Denver (and SFO to a lesser extent) as you can fly Houston through Denver to many small and mid markets out west staying on CAL/UAL. CAL's current route map our west is pretty spartan with IAH being the western-most hub.

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Seattle may work for a hop to Asia but wouldn't work well for domestic destinations as a feeder hub. From a travelers perspective, I would look forward to having a more western hub like Denver (and SFO to a lesser extent) as you can fly Houston through Denver to many small and mid markets out west staying on CAL/UAL. CAL's current route map our west is pretty spartan with IAH being the western-most hub.

With IAH, a combined CO-UA would make the DEN redundant. I think it's too close to Houston to keep it.

Of course, I've never understood why United waters down its SFO hub with all the SEA traffic, especially to Asia. But with the Delta-Northwest merger, United-Continental would probably get squeezed out of Seattle anyway. And possibly Tokyo, too.

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I'm not particularly sure how a merger of other airlines would crush CO. How would this happen?

If they don't do "something" ... or should I say, they elect to do "nothing" and stay independent, then they will get squished like a little bug, in this post-merger environment. The new DL+NWA airline, and AA, will eat CO's lunch.

Just think of a merger with UAL as a home foreclosure type of deal: damaged goods, at a discounted price - something that once you acquire - you can go in and fix up, to your liking. Why build a new house (creating their own Asian hub), when you get a fixer-upper, in the exact location you're looking for (leveraging UAL's existing Asian network) at a "lower cost." This could be a gem of a deal.

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I'm not sure it would crush Continental either. They would just be larger than CO.

MUCH larger. The only airline out there, not really talking merger, is AA. They're going to get boxed into a corner, and just eviscerate CO in Latin America. DL already has strong presence in Europe. CO has "worked hard and flown right" for too many years to get absolutely molested by bigger, combined airlines, on International routes. Southwest has already ruined their world on the domestic front. Even Gordo is pushing consolidation, big time...

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MUCH larger. The only airline out there, not really talking merger, is AA. They're going to get boxed into a corner, and just eviscerate CO in Latin America. DL already has strong presence in Europe. CO has "worked hard and flown right" for too many years to get absolutely molested by bigger, combined airlines, on International routes. Southwest has already ruined their world on the domestic front. Even Gordo is pushing consolidation, big time...

A Continental-United pairing would create the world's largest airline (although bigger is not always better!)

CO has successfully repositioned itself over the last few years. A UA merger could damage that progress.

Perhaps CO should follow the AA independent lead (for now) and see how this first merger (assuming Delta-NW) plays out

Edited by TxDave
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