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Continental & United Merger


citykid09

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Are there any former TIA employees left at Continetal, or have they just eased themselves out? I remember when Texas International acquired Continental way back when, the press likened it to David conquering Goliath.

Is it just greed, or is bankruptcy eminent for either if they decide not to merge?

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I completely disagree. The last thing United needs is another Hub. It is nothing but rhetoric from the top. They say that Houston will be this and that but I think we'll be forgotten about. It's just to keep the opposition quite long enough to pack up and leave. Once they do, Houston will be left with nothing but a funny walk and a jar of vaseline. So what other options will I have to fly out of IAH? I refuse to fly United. I'm mad as hell over this.

There is absolutely no reason to believe that Continental's hub is threatened. They may cut flights that duplicate service, but otherwise, neither United or Continental have a major presence at DFW...so I don't see that our region has much competition for hub operations.

Is it just greed, or is bankruptcy eminent for either if they decide not to merge?

It is a matter of business necessity, a response to the oligopolization of the industry.

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I completely disagree. The last thing United needs is another Hub. It is nothing but rhetoric from the top. They say that Houston will be this and that but I think we'll be forgotten about. It's just to keep the opposition quite long enough to pack up and leave. Once they do, Houston will be left with nothing but a funny walk and a jar of vaseline. So what other options will I have to fly out of IAH? I refuse to fly United. I'm mad as hell over this.

United most certainly needs IAH. Latin America cannot be adequately served by any of UA's other hubs except for Denver, which does not have the market for Latin America. They also need EWR (Newark) since without it, they would be unable to compete with Delta's extensive JFK and LGA network.

I should also point out that the Originating/Departing traffic out of Houston is very good and Continental has a very profitable captive market, and United isn't just going to drop IAH and all of the potential revenue, that would be extremely foolish.

Everyone hears the word "merger" and thinks the airline is going to be chopped up and sold for parts... It's just not true.

All we have to do is look at the Delta/Northwest merger to see what will happen. Delta has taken full advantage of the hubs that Northwest had and is playing with the route structures to maximize revenue. The only hub that has had issues is CVG (Cincinnati) but that's a Delta hub.

Lastly, if a merger is announced next week, I'm betting there will be stipulations in it that dictate that it depend on United's profitability for the next two quarters as that was one of the issues that made Continental back away from the table last time.

Any chance the HQ will be moved to Chicago but have Continental management running the show?

It has already been stated that Smisek will be the CEO with his management team if there is a merger and United's Tilton will be Chairman.

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call me an optimist, but nothing hass happened yet. People are already panicing. I'm just going to wait until the announcement is made. Either way, Chicago will eventually get what it wants at the end, even if it doesn't happen this time around.

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Well, I'm thankful that there are many other airlines that touch down here in Houston. I'll fly any carrier but United. Living on the north side, I'll even drive to Hobby for a southwest flight. I'm telling you, I'll never be caught on a United flight. I wouldn't trust them with a potato gun.

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Had a chat with a continental manager at the gym today and asked him about the continental-united talks. His take was that it was likely to happen but was still a toss-up for where headquarters would be. He was also certain that Houston would continue to be the Continental hub. The location is great for access to South America and the SW US plus it was pretty rare for a single airline like continental to be the primary air carrier for a city the size of Houston so leaving wouldnt make sense.

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Well I for one have accepted that they'll move the HQ. If any city can handle it, it's Houston. I think we'll feel a little bit of civic sting for a little while because cities like us, Atlanta, and Charlotte enjoy playing superlative numbers games to show how we measure up with other cities--even though we don't need to IMO. They will take their philantropic dollars to Illinois too, but overall in reality we'll be fine and may not even experience a real difference in the long term.

Or my head could just be in the sand.

Edited by GovernorAggie
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Houston and Texas leaders do not work for, nor are they employed, by Continental Airlines.

I am sure that the management and employees at both CO and UAL know how to handle this.

Outside interference is not needed.

No one has dropped the ball.

Only CO... can be blamed when their deal with the devil burns them.

Then, why is Chicago promising so many incentives?

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What is Chicago promising?

Something on the order of $35m in incentives for United to move operations from the suburbs to the Sears Tower.

The whole HQ thing is a dead issue. They're not going to turn around and renegotiate it just days before a merger is announced.

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The HQ won't be in Sears Tower though. They are just moving some offices there. 77 Wacker Drive would be the HQ if it is going to be in Chicago.

Edit: Or maybe I read that wrong.

Edited by Trae
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I don't like when huge companies merge to form larger companies, which results in an oligopoly, then when they mess up we got to bail them out. Hey Fed goverment what are you doing to help the consumer these companies are limiting competition. I get tired of hearing these banks, airlines, telecommunications companies ask for (and get) huge tax breaks just to to keep or move the company after they merger. But on that note, Annise Parker WTF are you doing, how do you let Chicago, Illinois out tax break cut Houston, Texas?!?! Heres what the city of Chicago needs to worrie about; when you are considering to bring in the National Guard to stop violence and murders, and it is not the first time this idea has come up, then you should handle that problem right away. IMO it is not a good look to have your world headquarters in a city that can not get its crime rate under control and has to call in the national gauard. Houston needs to get its oil companies to stop polluting the Gulf and other bodies of water around the world and stop plant explosions! Ms. Parker get more alternative energy companies to the city. Oil does not last forever. And Continental United sounds so much better than the other way around. Any airline would take a Houston winter over a Chicago winter anyday. It's a no brainer come to Houston!

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The Continental pilots could veto the ATI.

Also the Obama administration (not as friendly to mergers as the Bush administration was) is in charge, and Eric Holder, the head of the US DOJ, is sympathetic to unions. So we still have a lot of time before anything is finalized.

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I thought about this yesterday and maybe people with more expertise could enlighten me...

Isn't it odd that we're talking about a merger to create the world's largest airline--an industry with a proven faulty business practice--at a time when the federal government has been REDUCING the size of banks (also an industry that has been shown overall to have faulty business practices).

How can the Feds on one hand slash big banks but then allow airlines (who have already been at the bailout bin) to follow the opposite pattern?

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They feds may not allow the opposite pattern to happen. The merger of Delta and Northwest was completed when Bush was still in office.

I thought about this yesterday and maybe people with more expertise could enlighten me...

Isn't it odd that we're talking about a merger to create the world's largest airline--an industry with a proven faulty business practice--at a time when the federal government has been REDUCING the size of banks (also an industry that has been shown overall to have faulty business practices).

How can the Feds on one hand slash big banks but then allow airlines (who have already been at the bailout bin) to follow the opposite pattern?

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Something on the order of $35m in incentives for United to move operations from the suburbs to the Sears Tower.

The whole HQ thing is a dead issue. They're not going to turn around and renegotiate it just days before a merger is announced.

Oh that. I thought he was talking about some incentives for keeping the HQ in Chicago. The incentives you speak of are not related to the merger or to the Headquarters.

How certain can we really be that the HQ issue is a dead issue? No announcements whatsoever have been made by either Continental or United. So far as we know, the whole "HQ will be in Chicago, United will be the name" meme might be nothing more than the results of creative journalism by the Chicago Tribune, picked up in turn by the rest of the media. I am not giving up hope, for the simple reason that, from a purely business point of view and having nothing to do with my preference for one city or another, putting the merged companies HQ in Chicago would be bone-headed.

Edited by Houston19514
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Oh that. I thought he was talking about some incentives for keeping the HQ in Chicago. The incentives you speak of are not related to the merger or to the Headquarters.

How certain can we really be that the HQ issue is a dead issue? No announcements whatsoever have been made by either Continental or United. So far as we know, the whole "HQ will be in Chicago, United will be the name" meme might be nothing more than the results of creative journalism by the Chicago Tribune, picked up in turn by the rest of the media. I am not giving up hope, for the simple reason that, from a purely business point of view and having nothing to do with my preference for one city or another, putting the merged companies HQ in Chicago would be bone-headed.

I agree. I can see why they would move to Chicago over Houston even five or six years ago, but not now. United culture will most likely continue if you have the merged HQ in Chicago. Continental culture would if it is in Houston. The only thing Chicago offers that Houston doesn't (right now) is the prestige of being in the city. Maybe that's all Smisek needs. Would be shortsighted, though.

Edited by Trae
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Oh that. I thought he was talking about some incentives for keeping the HQ in Chicago. The incentives you speak of are not related to the merger or to the Headquarters.

How certain can we really be that the HQ issue is a dead issue? No announcements whatsoever have been made by either Continental or United. So far as we know, the whole "HQ will be in Chicago, United will be the name" meme might be nothing more than the results of creative journalism by the Chicago Tribune, picked up in turn by the rest of the media. I am not giving up hope, for the simple reason that, from a purely business point of view and having nothing to do with my preference for one city or another, putting the merged companies HQ in Chicago would be bone-headed.

Thats what I was thinking. Maybe some of those Chicago journalist wishfully want the HQs to be in Chicago, so they made up the fact that they heard from an insider that the HQ would be in Chicago.

These may not have been an option, but why not merge with American or US Airways? If merged with American the HQ would stay in Texas (Fort Worth or Houston) and if merged with US Airways, I'm sure Houston would have a better chance of keeping the HQ. I know business deals like these are made for the better good of the company's stakeholders, but IDK, I don't think it will workout that well.

I wonder what the city would be like if uncorrupted Enron was still in Houston, or if Compaq choose to stay in Houston or if HP moved the HQs to the city. I also wonder what it would be like to have the largest airline in the world. Thats something to boost about!

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The problem with US Airways is that it has two groups of pilots bickering with one another, and so the problems that face US Airways would carry over to Continental if the airline acquired that carrier.

And American Airlines and Continental have redundant route networks. Dallas is to Houston, Newark is to John F. Kennedy, etc.

Thats what I was thinking. Maybe some of those Chicago journalist wishfully want the HQs to be in Chicago, so they made up the fact that they heard from an insider that the HQ would be in Chicago.

These may not have been an option, but why not merge with American or US Airways? If merged with American the HQ would stay in Texas (Fort Worth or Houston) and if merged with US Airways, I'm sure Houston would have a better chance of keeping the HQ. I know business deals like these are made for the better good of the company's stakeholders, but IDK, I don't think it will workout that well.

I wonder what the city would be like if uncorrupted Enron was still in Houston, or if Compaq choose to stay in Houston or if HP moved the HQs to the city. I also wonder what it would be like to have the largest airline in the world. Thats something to boost about!

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Thats what I was thinking. Maybe some of those Chicago journalist wishfully want the HQs to be in Chicago, so they made up the fact that they heard from an insider that the HQ would be in Chicago.

These may not have been an option, but why not merge with American or US Airways? If merged with American the HQ would stay in Texas (Fort Worth or Houston) and if merged with US Airways, I'm sure Houston would have a better chance of keeping the HQ. I know business deals like these are made for the better good of the company's stakeholders, but IDK, I don't think it will workout that well.

I wonder what the city would be like if uncorrupted Enron was still in Houston, or if Compaq choose to stay in Houston or if HP moved the HQs to the city. I also wonder what it would be like to have the largest airline in the world. Thats something to boost about!

A merger with US Airways would not be a good decision and my guess is, if the United/Continental merger is finalized, US may turn into a low cost carrier or go away altogether.

Merging with AA would probably not be allowed due to overlapping networks and creating a market that would be uncontested (namely NYC and Texas). Plus, AA is struggling more financially than the other airlines, making them a not so welcome choice.

Consolidation is going to happen, either by a merger or an airline going out of business and to us, that means higher fares in the future.

I'm very interested to see if this merger goes through and how the labor issues are resolved.

Edited by Hartmann
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So I'm guessing this merger could also make American Airlines go out of business, leaving Texas with only the South West Airlines HQs. I wonder how this will effect smaller airports such as Easterwood in College Station? I believe Continental is the only commercial airline that still flys out of there.

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So I'm guessing this merger could also make American Airlines go out of business, leaving Texas with only the South West Airlines HQs. I wonder how this will effect smaller airports such as Easterwood in College Station? I believe Continental is the only commercial airline that still flys out of there.

If an airline bankruptcy is Chapter 11 (reorganization), then the airline is permitted to renegotiate its liabilities and it's ongoing obligations that might represent a crushing burden. So routes that do not generate an operating profit become at-risk of getting slashed, regardless of contractual or union obligations that might otherwise protect them. But that doesn't necessarily have to happen. As long as the airline in question can develop a route back to profitability, they tend to have a bit of flexibility as to how that is achieved.

If an airline bankruptcy is Chapter 7, then all their assets (mostly just their planes) get sold off. The customer base that they used to serve gets distributed among their competitors according to market forces. And the competitors can purchase the bankrupted assets if they need to expand routes to accommodate higher passenger loads.

If there are profitable routes to smaller airports like Easterwood, then they will just be picked up by another carrier. If the route is unprofitable, then what happened to Scholes Field in Galveston gets to happen to Easterwood in College Station.

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If an airline bankruptcy is Chapter 11 (reorganization), then the airline is permitted to renegotiate its liabilities and it's ongoing obligations that might represent a crushing burden. So routes that do not generate an operating profit become at-risk of getting slashed, regardless of contractual or union obligations that might otherwise protect them. But that doesn't necessarily have to happen. As long as the airline in question can develop a route back to profitability, they tend to have a bit of flexibility as to how that is achieved.

If an airline bankruptcy is Chapter 7, then all their assets (mostly just their planes) get sold off. The customer base that they used to serve gets distributed among their competitors according to market forces. And the competitors can purchase the bankrupted assets if they need to expand routes to accommodate higher passenger loads.

If there are profitable routes to smaller airports like Easterwood, then they will just be picked up by another carrier. If the route is unprofitable, then what happened to Scholes Field in Galveston gets to happen to Easterwood in College Station.

Exactly.

I actually think this merger might be good for AA. It will give them a chance to raise their fares in line with other carriers (something that they've not done because of other carriers keep their fares low).

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Exactly.

I actually think this merger might be good for AA. It will give them a chance to raise their fares in line with other carriers (something that they've not done because of other carriers keep their fares low).

You're contradicting yourself. If the other carriers' fares are low, then AA's fare are already in line with those other carriers. I think what you meant to suggest is that fares are too low across the board because of an oversupply of seats. A merger will shrink the number of planes in the air and routes flown, allowing all carriers to raise fares for the remaining seats. And, I agree. The airlines have been over-supplied for decades, and they have lost money for decades because of it. A little shrinkage in the industry will be good for them, albeit bad for the flying public.

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So is this confirmed? I'm like C2H and 19514, there's still hope. RIGHT? Judging from the series of posts and talks with people, it makes it sound like we've already lost! I'm hoping Continental comes to their senses and leaves them at the alter again. That's the only chance we'll keep Continental.

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They need to take all of their crap with them when they leave.

We don't want your garage sale leftovers, and we don't want to see your junk at the flea market after you've left. Get up, grab your belongings and move already. We will find someone just as nice, or probably nicer, to take your place.

We won't miss you, Greedy Bastards. Hope you freeze your ass off!

:)

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So is this confirmed? I'm like C2H and 19514, there's still hope. RIGHT? Judging from the series of posts and talks with people, it makes it sound like we've already lost! I'm hoping Continental comes to their senses and leaves them at the alter again. That's the only chance we'll keep Continental.

There is no hope.

This commercial kinda makes me cry. And those older GE commercials.

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The airline is of course still going to hub in Houston no matter what. Houston is an important part of Continental's network, and it will be an important part of a combined airline's network. The airline is not under any circumstance totally leaving Houston. The issue is the corporate headquarters.

If Continental's headquarters go, "We will find someone just as nice, or probably nicer, to take your place." will not happen in the foreseeable future (in terms of airlines, anyway) - In terms of other companies, maybe, but they may put their headquarters in locations other than 1600 Smith.

They need to take all of their crap with them when they leave.

We don't want your garage sale leftovers, and we don't want to see your junk at the flea market after you've left. Get up, grab your belongings and move already. We will find someone just as nice, or probably nicer, to take your place.

We won't miss you, Greedy Bastards. Hope you freeze your ass off!

:)

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We will find someone just as nice, or probably nicer, to take your place.

We won't miss you, Greedy Bastards. Hope you freeze your ass off!

:)

Probably not. At least, not another airline. The industry is consolidating, and there are fewer and fewer headquarters locations.

And if we do get another one at some point, they're liable to be just as greedy (and fatherless :huh: ) as any other corporation.

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You're contradicting yourself. If the other carriers' fares are low, then AA's fare are already in line with those other carriers. I think what you meant to suggest is that fares are too low across the board because of an oversupply of seats. A merger will shrink the number of planes in the air and routes flown, allowing all carriers to raise fares for the remaining seats. And, I agree. The airlines have been over-supplied for decades, and they have lost money for decades because of it. A little shrinkage in the industry will be good for them, albeit bad for the flying public.

Yeah, I left out a sentence. There needed to be a "As other airline raise their fares, AA will be able to raise them as well". There's definitely an oversupply of seats and that needs to be dwindled.

It's noticeable in AA's route network especially, where they throw widebody aircraft on "thin" routes with lots of competition (JFK-LAX). They barely make a profit on those flights and most of the time lose cash, especially when competing with Continental's EWR-LAX flights that are run on smaller planes where it takes less fuel, fewer flight attendants, and less maintenance.

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Ok.

This is what I've found out:

*IF* the merger goes through, a slowdown/moving will start by this summer.

2800+ jobs will head to Chicago.

The main reason for this is that United already owns several buildings outright, except for what they have at the Sears tower, whereas Co only lease space, with the exception of the jefferson st property.

No fed intereference will stand in the way of the merger, so only CO can call it off.

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Ok.

This is what I've found out:

*IF* the merger goes through, a slowdown/moving will start by this summer.

2800+ jobs will head to Chicago.

The main reason for this is that United already owns several buildings outright, except for what they have at the Sears tower, whereas Co only lease space, with the exception of the jefferson st property.

No fed intereference will stand in the way of the merger, so only CO can call it off.

This for the most part makes sense, though I'm not sure the how fed could not interfere. A merger is still going to have to stand up to federal scrutiny.

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This for the most part makes sense, though I'm not sure the how fed could not interfere. A merger is still going to have to stand up to federal scrutiny.

I might be mistaken, but from what I was able to understand, CO's merger with another airline (west?) Gives them a pass. Didn't make sense to me, but everything else seem to sound logical and didn't want to make my source stop talking.

I stilll think the feds might step in, but they are going so fast into it that its not its even a consideration.

I was told the merger talk barely began two weeks ago! I (and everyone at CO) was stunned on how quickly it all came together.

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I might be mistaken, but from what I was able to understand, CO's merger with another airline (west?) Gives them a pass. Didn't make sense to me, but everything else seem to sound logical and didn't want to make my source stop talking.

I stilll think the feds might step in, but they are going so fast into it that its not its even a consideration.

I was told the merger talk barely began two weeks ago! I (and everyone at CO) was stunned on how quickly it all came together.

It was probably relatively easy to pick up from where they started in their earlier, aborted merger talks.

The Feds could step in, but they won't. It annoys me to no end when companies merge for the sole reason of reducing competition and increasing consumer prices. In a country supposedly awash with capitalists, one would think there would be much more public outcry for the government to step in and make an effort to maintain competitive markets. But noooo...

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United's corporate headquarters is also leased. United's flight simulators are in Denver.

What buildings does United own in Chicago? How many of them are at O'Hare Airport? How many buildings are owned by Continental at Bush Airport?

BTW Continental's corporate headquarters is also leased. CO leases space at two buildings.

Ok.

This is what I've found out:

*IF* the merger goes through, a slowdown/moving will start by this summer.

2800+ jobs will head to Chicago.

The main reason for this is that United already owns several buildings outright, except for what they have at the Sears tower, whereas Co only lease space, with the exception of the jefferson st property.

No fed intereference will stand in the way of the merger, so only CO can call it off.

Edited by VicMan
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The Feds could step in, but they won't. It annoys me to no end when companies merge for the sole reason of reducing competition and increasing consumer prices. In a country supposedly awash with capitalists, one would think there would be much more public outcry for the government to step in and make an effort to maintain competitive markets. But noooo...

Whether by way of liquidation, reorganization, or merger, airline consolidation is going to continue to happen. Pick your poison.

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During the merger discussions two years ago, it was also assumed that Chicago would be the new HQ. It will be unfortunate if the HQs leave Houston, but it's a relatively small number of jobs, and reports indicate that not all downtown office jobs would move to Chicago. I doubt it have any significant effect on the overall local economy.

Chicago is a great city to visit, but those moving to Chicago can expect a significant negative cost of living adjustment, including state income tax. Hopefully they will get compensation adjustments. According to salary.com, someone making $100,000 in Houston will see a negative $30,517 change in net disposable income in Chicago. That should add a sting to those frigid cold winters. On the plus side, a half-gallon of milk is $0.17 cheaper in Chicago.

Here is a brief report from ABC13 yesterday.

Pilots speak out on proposed Continental/United merger

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Well while having the world's biggest airline's HQ would have been preferable, maybe having the biggest hub of the world's biggest airline will take a little of the sting out. Any idea on whether IAH will approach the busy-ness of ATL?

Edited by GovernorAggie
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Well while having the world's biggest airline's HQ would have been preferable, maybe having the biggest hub of the world's biggest airline will take a little of the sting out. Any idea on whether IAH will approach the busy-ness of ATL?

Nope. We'll need to have a dual hub at the very least. Check out the level of enplanements according to the FAA.

IAH + HOU = 20,030,898 + 4,246,907 = 24,277,805

DFW + DAL = 27,219,285 + 4,021,976 = 31,241,261

ORD = 33,683,991

ATL = 43,761,280

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Well while having the world's biggest airline's HQ would have been preferable, maybe having the biggest hub of the world's biggest airline will take a little of the sting out. Any idea on whether IAH will approach the busy-ness of ATL?

Nope, still depressing. Now Houston has one less fortune 500. Unless its home to the company thats 501, then it would still be home to the same amount.

Edited by citykid09
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Nope. We'll need to have a dual hub at the very least. Check out the level of enplanements according to the FAA.

IAH + HOU = 20,030,898 + 4,246,907 = 24,277,805

DFW + DAL = 27,219,285 + 4,021,976 = 31,241,261

ORD = 33,683,991

ATL = 43,761,280

I'm not so certain. A few reports have IAH as being the largest hub for what will now be the world's largest airline. United has long wanted a piece of the Latin American pie. Now they have the Latin American gateway in their control. Our airport will soon become a busy mess.... which I'm not looking forward to.

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You know...

We get angry sometimes, with CEO pay.

Millions and millions of dollars.

Golden parachutes.

One day... a CEO says... he'll forgo his pay...

How noble.

What a conflict of interest that was!

Oops... How did we miss this one?

And now CO is history.

I am sure Jeff will be paid well.

He's looking out for numero uno.

And that's not you.

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