royevans

Sorry if this has been posted before, it was the first I had heard of it...

By REUTERS
Published: April 25, 2008
Filed at 3:40 p.m. ET

Skip to next paragraph NEW YORK (Reuters) - American Airlines <AMR.N> has had early-stage merger talks with US Airways <LCC.N> and is in advanced talks for an alliance with Continental Airlines <CAL.N>, sources briefed on the situation said.
American Airlines' talks with Continental are focused on forming an alliance. Meanwhile. Continental is in advanced merger talks with United Airlines <UAUA.O>.

First I've heard this about AA. A new alliance?

Anglo Large Clawed Otter

Could this be an oblique reference to J.Edward's theory (a CO/AA/Chase Bank liquidation/asset-grab of UA)?

ndhapple

I saw this roll across the wire all of 5 minutes ago... Does anyone have a link to the Reuters article or is this just a bulletin as of now? I'll post my thoughts (whatever they are worth) whenever I can actually see the story.

Here's the link... It's just a bulletin right now. http://www.reuters.com/articlePrint?...30664420080425
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Some thoughts about a AA/CO alliance as those talks seem to have progressed the furthest.
1) There is not a snowball's chance in hell that this alliance would get the antitrust immunity that the NW/CO or UA/US alliances got. There is way to much overlap. This would be a single alliance that would control 70% of the traffic at IAH, 80% of the traffic at DFW, 60-65% of the traffic at AUS, ~60% at SAT. Same goes for New York where AA has the largest operation at LGA, the second largest at JFK (behind B6 and its not really a fair comparison because AA does almost zero domestic service from Idlewild) with a hub at EWR. You would have one alliance controlling more than half of the busiest aviation market in the country. I can see even Bush's anti-trust regulators gagging on this.

2) Internationally, this does nothing for AA and might only CO some extra flights to LHR each day with a code-sharing arrangement on international traffic. AA owns Central and Latin America and CO is their biggest competitor. Their European offerings are almost completely redundant (with an destination here or there that one might serve but not the other). Both airlines have massive holes in their route network over the Pacific Ocean (though Continental does serve HKG and AA actually has a good NRT schedule).

3) Provided its a reciprocal code-sharing agreement on the domestic network, CO would gain a significantly larger presence at LAX, SJC, and in the midwest (Cleveland is as much of a hub as STL is). AA would gain... Newark and Houston (are those really gains? While we're at it, would it kill AA to add some domestic flying out of JFK so the rest of us can get to Europe?)

bspencerco

CO gets UA's planes and routes, AA gets their employees!

FlyingHoustonian

Would be interesting to see AA and Co divide and conquer UA.

But the article mentions "alliance". Wonder if that means CO jumping to OneWorld (though thoughts were CO would jump to *alliance if the UA matter came to fruition)

If they did form an alliance they would "own" Texas and New York.

Ciao,
FH

sdm1130

AA and US merge. CO and UA merge. CO and AA form an alliance via oneworld?

rkkwan

No, I think it's UA/US merge. CO joins oneworld to form alliance, but independent from AA.

manneca

I was hoping for CO in *A--better global coverage unless I'm missing something. Oneworld seems a little bare.

I guess I'd better start my exit strategy from NW/Delta.

ndhapple

Where exactly is OneWorld bare? Qantas for Australia. Cathay Pacific and JAL for East Asia. BA and Iberia for Europe and Africa. LAN and Mexicana for Central and South America.

sdm1130

I agree. Even with CO, the coverage of oneworld would be some what disappointing when compared to *A.

Anglo Large Clawed Otter

Indeed. OneWorld has almost all the bases covered (with the exception of most of Africa). However, *A is just a behemoth. For every OW Option, there's usually three *A options (except in S. America, at least until TAM's rumored accession to *A).

sbm12

Mostly Europe, Africa, Central Asia and South East Asia. You'd have to connect in Spain or the UK to get around in Europe; that isn't particularlty convenient, especially compared to the plethora of options that ST and *A offer throughout Europe for connection points. *A has TK now which is the closest you'll get to a good connection carrier in Central Asia. In South East Asia *A has TG and SQ, both offering many more options than CX does. SkyTeam is also woefully inadequate in this area. In Africa ST has KQ and *A has SA. At least those carriers are based on the continent. ST is better in the Americas as far south as northern S. America.

OW has basic coverage everywhere, but not much beyond that.

ndhapple

Well you can thank Willie Walsh for some of that. Oh no, he just couldn't let SWISS join OneWorld because they might be competition.

Africa coverage is pretty weak, but you can expect that Brussels Airlines will be joining OneWorld in fairly short order. They already extensively codeshare with AA here in the states. Jet Airways is also rumored to be joining OneWorld eventually which will dramatically improve access to the subcontinent.

Anglo Large Clawed Otter

How dare you slight Air Astana. I am most offended.

rkkwan

CO already has two flights to NRT a day, one to HKG, and of course just paid a huge amount for LHR. These routes will all be worth more if they switch to oneworld. And of course, we'll expect more flights to MAD and fewer to AMS/CDG.

What is more troublesome for the casual leisure flyer is the lousy FF miles many of the oneworld partners give out. Even for AAdvantage, I believe you'll find many 70%, 25% and tonnes of 0% on the discount Y fares. And I'm talking about RDM, not EQM. I won't expect they'll offer more Onepass than AAdvantage miles.