Continental & United Merger

[VicMan]

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!

[Hartmann]

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.

[citykid09]

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.

[TheNiche]

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.

[Hartmann]

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).

[LTAWACS]

I spoke with my contact at CO in DT Houston today... people are fleeing, getting their resumes ready, and packing their things. Ugh. This was never good news.

[RedScare]

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.

[Trae]

Company logo? Found this at SSP:

I only wish the HQ stays in Houston. Looking less likely every day, though, unfortunately.

[scarface]

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.

[plumber2]

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!

[BryanS]

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.

[VicMan]

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!

[TheNiche]

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 ) as any other corporation.

[RedScare]

However, they WILL freeze their asses off.

As long as they leave the FAs, I don't care if the stinkin' head honchos leave.

[Hartmann]

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.

[ricco67]

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.

[Hartmann]

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.

[ricco67]

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.

[Subdude]

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...

[VicMan]

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.

[TheNiche]

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.

[barracuda]

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

[GovernorAggie]

On the plus side, a half-gallon of milk is $0.17 cheaper in Chicago.

Ha! Nice Wisconsin-neighbor discount at work there!

[rgr]

merger approved by both boards. announcement expected early in the morning.

http://www.chron.com...ss/6986235.html

they say admin and reservation positions will be most vulnerable. admin? what about downtown middle management. shouldn't they be included?

[GovernorAggie]

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?

[TheNiche]

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

[citykid09]

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.

[scarface]

Man this sucks! Why???

What's going to happen to the Continental building?

[tigereye]

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.

[BryanS]

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.