Delta Airlines

[TheNiche]

Now I am hearing that perhaps AA and CO will feast on the carcass of UAL. That is, UAL gets divided up and split between CO and AA. This keeps CO and AA intact (but larger), allowing both airlines to get around union labor contract issues. It will absolutely ensure the destruction of UAL, of which CO and AA get to pick over the parts and pieces for themselves.

Now we're talking!

The four biggest airlines in the world, concentrated in Houston, Dallas, and Atlanta, the three fastest growing cities in the richest country in the world. Just as they should be.

[Trae]

Now I am hearing that perhaps AA and CO will feast on the carcass of UAL. That is, UAL gets divided up and split between CO and AA. This keeps CO and AA intact (but larger), allowing both airlines to get around union labor contract issues. It will absolutely ensure the destruction of UAL, of which CO and AA get to pick over the parts and pieces for themselves.

This is what should happen. CO just needs to pick up some West Coast hubs and Asian routes.

[ToryGattis]

Now I am hearing that perhaps AA and CO will feast on the carcass of UAL. That is, UAL gets divided up and split between CO and AA. This keeps CO and AA intact (but larger), allowing both airlines to get around union labor contract issues. It will absolutely ensure the destruction of UAL, of which CO and AA get to pick over the parts and pieces for themselves.

I'm curious how this would work out. Any theories? There's certainly no way the regulators would let AA get all of Chicago to themselves. AA has no need for Denver - too close to DFW. The only domestic pieces I could see going to AA would be LA and/or DC. Since SF and LA aren't really domestic connecting hubs, and can only support limited nonstop destinations, that setup would allow CO+UA to feed SF traffic thru Denver (and Chicago) to secondary destinations, and AA to do the same from LA thru DFW. Not good for helping IAH's feed.

I suspect AA wants access to Asia, and threatened to disrupt the consolidations with their own hostile offers if they didn't get what they wanted. United and NWA have "5th freedom" rights from Tokyo, allowing them operate hubs there. Very valuable. But UAL doesn't really need it anymore, because they've been building Asia service out of SF and Chicago. Throw in Continental out of Newark, and they have plenty of domestic hubs feeding Asia. I suspect they will sell the Tokyo rights to AA. If so, I think that means Houston is likely to lose our Tokyo flight, unless there's enough traffic to feed Star Alliance partner ANA there.

The question is, would it be a full-blown carve-up of UAL? (and how would United possibly agree to that? can a hostile takeover and break-up work in this political environment? or even if it's voluntary, the UAL union pressures would be huge to block the deal.) Or would it just be CO merging with UA and then selling off the Tokyo rights to AA? The latter seems far more feasible.

[Subdude]

Now I am hearing that perhaps AA and CO will feast on the carcass of UAL. That is, UAL gets divided up and split between CO and AA. This keeps CO and AA intact (but larger), allowing both airlines to get around union labor contract issues. It will absolutely ensure the destruction of UAL, of which CO and AA get to pick over the parts and pieces for themselves.

That sounds like a stretch. UAL isn't dead for heaven's sake. The odds of CO and AA being able to pull off a hostile takeover must be close to nil.

[KinkaidAlum]

I'm curious how this would work out. Any theories? There's certainly no way the regulators would let AA get all of Chicago to themselves. AA has no need for Denver - too close to DFW. The only domestic pieces I could see going to AA would be LA and/or DC. Since SF and LA aren't really domestic connecting hubs, and can only support limited nonstop destinations, that setup would allow CO+UA to feed SF traffic thru Denver (and Chicago) to secondary destinations, and AA to do the same from LA thru DFW. Not good for helping IAH's feed.

I suspect AA wants access to Asia, and threatened to disrupt the consolidations with their own hostile offers if they didn't get what they wanted. United and NWA have "5th freedom" rights from Tokyo, allowing them operate hubs there. Very valuable. But UAL doesn't really need it anymore, because they've been building Asia service out of SF and Chicago. Throw in Continental out of Newark, and they have plenty of domestic hubs feeding Asia. I suspect they will sell the Tokyo rights to AA. If so, I think that means Houston is likely to lose our Tokyo flight, unless there's enough traffic to feed Star Alliance partner ANA there.

The question is, would it be a full-blown carve-up of UAL? (and how would United possibly agree to that? can a hostile takeover and break-up work in this political environment? or even if it's voluntary, the UAL union pressures would be huge to block the deal.) Or would it just be CO merging with UA and then selling off the Tokyo rights to AA? The latter seems far more feasible.

Why in the world would we lose our IAH-NRT flight if United sold their Tokyo 5th freedom rights?

Continental's IAH-NRT flight is rumored to be wildly successful. The fares on this route are generally higher across the board than Continental's flight from EWR to NRT.

[ToryGattis]

Why in the world would we lose our IAH-NRT flight if United sold their Tokyo 5th freedom rights?

Continental's IAH-NRT flight is rumored to be wildly successful. The fares on this route are generally higher across the board than Continental's flight from EWR to NRT.

I assume the Tokyo flight mostly feeds connecting flights to the rest of Asia on Northwest's hub there (SkyTeam partner). I don't think there's enough traffic to/from just Tokyo to justify it, although I could be wrong. If United gave up their hub there and merged with CAL, the flight would have to survive on O&D traffic, plus maybe a small amount connecting to/from Latin America (although I'm not sure how much of that there is, because I believe they have to go through full U.S. customs and immigration just to transfer). Hopefully that would be enough to support it.

[CALMSP]

you'd be surprised at the amount of oil traffic that connects toprivate airplanes flying to upper siberia.

[World_Explorer]

Hi

First post here although I am a long time lurker. IAH-NRT as well as IAH-LGW (now LHR) are some of Continental's most profitable routes. I can't see NRT going away any time soon.

[ssullivan]

Welcome World Explorer!

I agree. Those routes are far too profitable and important to go away, even in a proposed merger scenario.

I'm still hoping and praying that the Delta/Northwest merger falls apart. I have yet to see any benefit to it for anyone other than institutional investors and high-ranking executives at both companies. Employees and customer are just going to get run over on this deal. It will do nothing to solve the poor management issues that have plagued both of these airlines, and are much of the reason why both have not been performing well financially.

[CALMSP]

international would be the last thing to go...............the only thing that airlines are saying tat are making them money are the international routes........so no international route will be cut if a merger happens.

[BryanS]

...now hearing that, perhaps, US Air + UAL deal is in the works... UAL is wanting some management say in the CO deal... CO not interested. CO to sit tight, watch the US+UAL disaster ensue.

...and then... CO basically said "screw you, ExpressJet" regarding their potential merger with SkyWest. Translation of the SEC filing: "We hear you (ExpressJet) had a little conversation with SkyWest. Guess what? We (CO) have already spoken to SkyWest - if they take you over, we get a better deal/lower cost to us. So go ahead - make our day. And by the way: 1.) we can terminate our agreement with you at any time and 2.) we're not renewing our agreement with you anyway."

EDIT: If US Air + UAL happens, then AA and CO could be independent, but "partners" ... whatever that is going to mean... It keeps getting stranger and stranger...

[Trae]

Time to cry (this is from SSP, posted by a Chicago poster):

Continental and United step up merger talks

By Justin Baer in New York

Published: April 26 2008 03:00 | Last updated: April 26 2008 03:00

Continental Airlines is in advanced talks to merge with rival United Airlines, and the two carriers could reach an agreement as soon as early May, people familiar with the matter said yesterday.

Both companies continue to weigh other options, the people said. Continental is considering joining American Airlines and British Airways in applying for immunity from US antitrust laws, freeing the three to forge a three-way marketing alliance. United is pondering a merger with US Airways.

Important excerpt:

Continental and United had found common ground on some issues, with the former agreeing to keep the United name and Chicago headquarters in exchange for appointing Larry Kellner, Continental's chief executive, as the combined company's chief.

http://www.ft.com/cms/s/60f9ff18-1328-11dd...;nclick_check=1

[citykid09]

I knew this was coming, and the city of Houston will just sit back and let Chicago take their hometown airline. Now the city will go through a depressing moment again as it did with Enron and Compaq. Continental Airlines is Houston's largest private employer, so this is going to be big. If only Houston had the balls to ensure that Continental and the headquarters stay there.

I here that they are trying to rush it so that the Bush administration aproves it, because getting a merger passed with a Democrat as president will likley not pass. With that said I hope this merger talk takes forever.

[Trae]

I knew this was coming, and the city of Houston will just sit back and let Chicago take their hometown airline. Now the city will go through a depressing moment again as it did with Enron and Compaq. Continental Airlines is Houston's largest private employer, so this is going to be big. If only Houston had the balls to ensure that Continental and the headquarters stay there.

I here that they are trying to rush it so that the Bush administration aproves it, because getting a merger passed with a Democrat as president will likley not pass. With that said I hope this merger talk takes forever.

Well, it does not look like CO/United merger is a done deal (or even close). A article I read said that a US Airways/United merger is more likely and a MUCH easier merger. That, and American and Continental are going to setup an alliance, so CO could not merge with United. The fact that Continental has said themselves that they would rather stay independent, shows that the merger is less likely. United has not said that they would rather stay alone, so a US Airways merger looks more likely.

Here is the article: http://www.reuters.com/article/ousiv/idUSN2531898820080426

By the way, could you explain what happened after Enron and Compaq left?

[citykid09]

Well, it does not look like CO/United merger is a done deal (or even close). A article I read said that a US Airways/United merger is more likely and a MUCH easier merger. That, and American and Continental are going to setup an alliance, so CO could not merge with United.

Here is the article: http://www.reuters.com/article/ousiv/idUSN2531898820080426

By the way, could you explain what happened after Enron and Compaq left?

Trae, thats yesterdays news. Search for articles that say 26th of April.

And after Enron left downtown many of the sorounding shops arounded it that where supported by Enron employees went out of business. It was like a chain affect. After Compaq left they left a big complex off of 290 in Cypress next to the METRO transit center empty. After it closed the center was set to be a U of H Northwest campus, by Prairie View was affraid that it would take students from them, so that didn't happen.

[Trae]

It came out late last night if you didn't know. I read it yesterday when it came out. You didn't say anything on the article about CO possibly leaving, which came out days ago.

And your explanation on Compaq is pretty weak.

[editor]

I don't think any explanation of the aftermath of Compaq or Enron is needed.

I'm still against the Delta/Northwest deal. I've been watching a particular Delta-only route for the last three years -- pretty much every week I check the price. It's usually between $450 and $800. Two days ago it suddenly dropped to $273, including tax. So I'll be taking my first Delta trip since I was a child (back when the joke was that Delta meant Don't even let them aboard [a reference to Arab hijackers in the pre-P.C. 70's]) We'll see if this changes my mind, but I've always thought of Delta as not a great experience.

[CALMSP]

everyone should keep their ears open this week regararding CO.....

[jayshoota]

everyone should keep their ears open this week regararding CO.....

lol...ugh, way to leave us hangin...

[ssullivan]

So I'll be taking my first Delta trip since I was a child (back when the joke was that Delta meant Don't even let them aboard [a reference to Arab hijackers in the pre-P.C. 70's]) We'll see if this changes my mind, but I've always thought of Delta as not a great experience.

Delta isn't horrible; it's certainly better than United (most of the time; when United is good it tends to be really good, but it doesn't happen often) and Delta's customer service is miles above what you'll experience at US Airways (not that that's saying much). My biggest gripes with Delta are that they tend to be rather inconsistent with service delivery and the on-board product, and that they try very hard to come across as this ultra-hip and cool airline, while looking really lame in how they do it. I don't think you'll find them to be a really bad experience, but they are far from great.

[RedScare]

Maybe not.

Continental Says NO!

[citykid09]

Maybe not.

Continental Says NO!

Great news to end the day with. I don't mind if CO merges, as long as its in the city of Houstons favor.

[Trae]

Smart move Continental. I just could not see them merging and having the HQ, colors, and name changed.

[BryanS]

...this may be a short-lived victory... this was a once-in-a-lifetime opportunity, so I read... "good" for CO... for now. Later, they could suffer a hostile takeover. That will surely ruin their world. That is what I am hearing... If US Air and UAL merge... WHAT A MESS! ... the whole AmericaWest, US Air merger is still a work in progress... now they are going to add United to the mix. CLUSTER!

[Trae]

CO doesn't need a big merger like that. A smaller one like Alaska Airlines would be fine. Then, expand into Asia from those West Coast hubs they get.

[citykid09]

...this may be a short-lived victory... this was a once-in-a-lifetime opportunity, so I read... "good" for CO... for now. Later, they could suffer a hostile takeover. That will surely ruin their world. That is what I am hearing... If US Air and UAL merge... WHAT A MESS! ... the whole AmericaWest, US Air merger is still a work in progress... now they are going to add United to the mix. CLUSTER!

Thank! Debbie downer! lol

[BryanS]

Thank! Debbie downer! lol

From an unamed source...

You're enjoying your day

Everything's going your way

Then along comes Debbie Downer.

Always there to tell you 'bout a new disease

A car accident or killer bees

You'll beg her to spare you, "Debbie, Please!"

But you can't stop Debbie Downer!

[VicMan]

...this may be a short-lived victory... this was a once-in-a-lifetime opportunity, so I read... "good" for CO... for now. Later, they could suffer a hostile takeover. That will surely ruin their world. That is what I am hearing... If US Air and UAL merge... WHAT A MESS! ... the whole AmericaWest, US Air merger is still a work in progress... now they are going to add United to the mix. CLUSTER!

How would CO get a hostile takeover? I would think CO would resist in the same manner that Alaska Airlines would resist hostile takeovers.

[RedScare]

How would CO get a hostile takeover? I would think CO would resist in the same manner that Alaska Airlines would resist hostile takeovers.

That's pretty much why they are called hostile takeovers. Continental WOULD resist, as in, the board would reject the offer. The other airline or investors would then make an unapproved offer to the shareholders for their stock at some inflated price. Once they have enough shares, they vote the board members out, and replace them with friendly board members who approve the takeover.

[Porchman]

And so the dance continues...

From the Houston Chronicle:

Continental and United in advanced alliance talks