CO in advanced talks with BA/AA over potential alliance
Apr 25, 2008, 5:11 pm
#1
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CO in advanced talks with BA/AA over potential alliance
News is that AA are in talks with Continental over a possible alliance.
I'm sitting here in STL Admiral's Club and the AA staff are all saying there is more to it - senior staff have had instructions to treat CO as a 'friend and future partner'
I'm sitting here in STL Admiral's Club and the AA staff are all saying there is more to it - senior staff have had instructions to treat CO as a 'friend and future partner'
Apr 25, 2008, 6:09 pm
#2
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AA is in talks with CO and US Airways. CO is also in discussions with United Airlines.
Originally Posted by Reuters
NEW YORK (Reuters) - American Airlines has had early-stage merger talks with US Airways and is in advanced talks for an alliance with Continental Airlines, sources briefed on the situation said on Friday.
...
American Airlines' talks with Continental are focused on forming an alliance that could share passengers, much like the SkyTeam partnership that includes Air France-KLM, Alitalia, Czech Airlines, Delta Air Lines, and Northwest Airlines, the people said.
But Continental is also in advanced talks with United Airlines for a full merger, the sources said. Continental will choose either the merger or the alliance, not both, sources said.
Meanwhile, United Airlines is also in serious merger talks with US Airways, and will choose to merge with either Continental or US Airways soon, the people said.
American's talks with US Airways were not serious at this point, one person said.
Aviation consultant Bob Mann said a US Airways-American Airlines merger would not be a marquee matchup and would give American, currently the largest U.S. carrier, little extra depth overseas.
"It doesn't match Northwest-Delta and it would not match the global presence of a Continental-United, if that were going to happen," Mann said. "But I think if Delta-Northwest does happen and Continental (and United) does happen, about the only thing left on the board is US Airways."
All of the airlines declined to comment.
MEGA-MERGER?
Continental, which has said it would prefer to remain independent unless the competitive landscape changes, had laid most of the groundwork for a merger with United even before Delta and Northwest announced their deal, the sources said.
Under the terms being negotiated, Continental Chief Executive Larry Kellner would be CEO of the combined airline and UAL CEO Glenn Tilton could be chairman, the people said. Other details are still being negotiated in what would be another all-stock deal.
Combining United with Continental would create a company with a combined $35 billion in revenue and nearly 100,000 employees, surpassing the Delta-Northwest combination.
But that merger may not happen. United Airlines, whose shares plunged 40 percent when it reported a quarterly loss earlier this week, is also talking to US Airways.
Analysts have said a merger of United and US Airways would be less complex than a United/Continental combination.
JP Morgan analyst Jamie Baker said earlier this week a deal between United and US Airways could be easier when it comes to aligning pilot pay, combining fleets and cutting flights and seats.
Baker also said the merger would be easier because United and US Airways already have code-share agreements and are part of the Star Alliance.
"United was interested in America West in 1998, US Air in 2000. Today, both are available under one roof," Baker said. America West and US Airways merged in 2005.
...
American Airlines' talks with Continental are focused on forming an alliance that could share passengers, much like the SkyTeam partnership that includes Air France-KLM, Alitalia, Czech Airlines, Delta Air Lines, and Northwest Airlines, the people said.
But Continental is also in advanced talks with United Airlines for a full merger, the sources said. Continental will choose either the merger or the alliance, not both, sources said.
Meanwhile, United Airlines is also in serious merger talks with US Airways, and will choose to merge with either Continental or US Airways soon, the people said.
American's talks with US Airways were not serious at this point, one person said.
Aviation consultant Bob Mann said a US Airways-American Airlines merger would not be a marquee matchup and would give American, currently the largest U.S. carrier, little extra depth overseas.
"It doesn't match Northwest-Delta and it would not match the global presence of a Continental-United, if that were going to happen," Mann said. "But I think if Delta-Northwest does happen and Continental (and United) does happen, about the only thing left on the board is US Airways."
All of the airlines declined to comment.
MEGA-MERGER?
Continental, which has said it would prefer to remain independent unless the competitive landscape changes, had laid most of the groundwork for a merger with United even before Delta and Northwest announced their deal, the sources said.
Under the terms being negotiated, Continental Chief Executive Larry Kellner would be CEO of the combined airline and UAL CEO Glenn Tilton could be chairman, the people said. Other details are still being negotiated in what would be another all-stock deal.
Combining United with Continental would create a company with a combined $35 billion in revenue and nearly 100,000 employees, surpassing the Delta-Northwest combination.
But that merger may not happen. United Airlines, whose shares plunged 40 percent when it reported a quarterly loss earlier this week, is also talking to US Airways.
Analysts have said a merger of United and US Airways would be less complex than a United/Continental combination.
JP Morgan analyst Jamie Baker said earlier this week a deal between United and US Airways could be easier when it comes to aligning pilot pay, combining fleets and cutting flights and seats.
Baker also said the merger would be easier because United and US Airways already have code-share agreements and are part of the Star Alliance.
"United was interested in America West in 1998, US Air in 2000. Today, both are available under one roof," Baker said. America West and US Airways merged in 2005.
Apr 26, 2008, 4:49 am
#3
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The idea of an "alliance" is actually much better than a merger, I think, since it allows both to continue with their own strengths. For instance, I don't want to go to a two-cabin international model, but that actually works very well for CO and would be fine on a limited range of flights. The big issue is that it doesn't help with the pacific, immediately, although an alliance in the AF/KL model, with some revenue sharing, could provide new ways of splitting off routes that might be very workable.
Apr 26, 2008, 6:02 am
#4
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well when you consider...
Remember, the other rumors flying around
CO + UA merger
UA + US merger
US + unnamed partner
NW/DL = announced
This will move the industry. Simple as that.
What I hope? To use my BA Gold card to get into Pres club. I find it is always a great place to hang! Personal pref is the NWA world club, if on skyteam, but will happily go to Pres. Club.
Admiral's Club? I'd rather go give my money to some one else that is a full service club. Oh, that would be the BA FIRST lounge if available (I have Gld card open door, TY BA!), or in the alt, anything skyteam.
Dave
CO + UA merger
UA + US merger
US + unnamed partner
NW/DL = announced
This will move the industry. Simple as that.
What I hope? To use my BA Gold card to get into Pres club. I find it is always a great place to hang! Personal pref is the NWA world club, if on skyteam, but will happily go to Pres. Club.
Admiral's Club? I'd rather go give my money to some one else that is a full service club. Oh, that would be the BA FIRST lounge if available (I have Gld card open door, TY BA!), or in the alt, anything skyteam.
Dave
Apr 26, 2008, 6:13 am
#5
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As both AA and CO share the same home state, I really can't see any alliance working. Whilst CO has some interesting coverage in the Pacific with Micronesia, overall AA and CO share too many similarities in route coverage. Even a merger seems unlikely unless AA simply wants to bulk up and generally a merger needs to offer more than just a bigger fleet size.
The only positive about a merger in my eyes is that services would potentially improve up to CO standards which I certainly believe is the best of the majors in North America.
The only positive about a merger in my eyes is that services would potentially improve up to CO standards which I certainly believe is the best of the majors in North America.
Apr 26, 2008, 6:42 am
#6
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As a UA and BA elite, AA I would think would be a better addition than CO or US to merge with UA. I can then use my BA silver (soon gold) to get into the AA and UA lounges, and also use my UA card for upgrades on both UA and AA.
Apr 26, 2008, 7:29 am
#7
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Which will never happen. I am sure that is probably the one merger combination both the US and EU competition authorities would have the most issue with. Even a UA/DL or AA/DL would raise a few eyebrows not that either would be considered in the first place.
Apr 26, 2008, 12:50 pm
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As both AA and CO share the same home state, I really can't see any alliance working. Whilst CO has some interesting coverage in the Pacific with Micronesia, overall AA and CO share too many similarities in route coverage. Even a merger seems unlikely unless AA simply wants to bulk up and generally a merger needs to offer more than just a bigger fleet size.
The only positive about a merger in my eyes is that services would potentially improve up to CO standards which I certainly believe is the best of the majors in North America.
The only positive about a merger in my eyes is that services would potentially improve up to CO standards which I certainly believe is the best of the majors in North America.
Apr 26, 2008, 2:15 pm
#10
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It depends on how you measure it. IIRC there's only one US domestic carrier that's been profitable every one of the last 30+ years. Yup, you guessed it - Southwest. By contrast CO has been trhough Chapter 11 twice in that time. That's not to say that I wish CO would change to be like WN - there's space for several business models in the market.
Apr 26, 2008, 3:10 pm
#11
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There are media reports that AA and CO have all but agreed to merge. They want the deal done and approved before the Bushies leave town. Remember both are Texas based!
Apr 26, 2008, 3:45 pm
#12
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I still can't see any benefit whatsoever especially for the state of Texas.
Apr 27, 2008, 2:51 am
#13
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Isn't that amazing really - I had not realised that CO and AA - arguably the finest airlines in the US since UA relinqished that accolade - and WN are all Texas based. I have a very soft spot for Wn since I remember using them from Love Field to El Paso when they were an intracarrier a long time ago. I am just supposing that they are still based at Dallas. AA have run all the competetion into bankrupcy (BN and DL) and when I was last there (goign back soon yippee!) DFW was a sea of silver as there seemed to be little other traffic there.
I have nothing against DL - but when I asked whether HI and I should fly BusElite or Business First - not one person told me to use DL and I am very pleased with their choice.
I have nothing against DL - but when I asked whether HI and I should fly BusElite or Business First - not one person told me to use DL and I am very pleased with their choice.
Apr 27, 2008, 3:59 am
#14
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Interestingly, The Financial Times yesterday named BA as a potential alliance partner (in concert with AA):
Article in full [click here]
Originally Posted by FT.com
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.
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.
Apr 27, 2008, 10:15 am
#15
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Isn't that amazing really - I had not realised that CO and AA - arguably the finest airlines in the US since UA relinqished that accolade - and WN are all Texas based. I have a very soft spot for Wn since I remember using them from Love Field to El Paso when they were an intracarrier a long time ago. I am just supposing that they are still based at Dallas. AA have run all the competetion into bankrupcy (BN and DL) and when I was last there (goign back soon yippee!) DFW was a sea of silver as there seemed to be little other traffic there.
WN are still very much Texan - there are always people in every City who claim to have known Herb when they were starting out. DFW has, as you say, become a sea of silver since DL shut their hub in 2004/5 and pretty much vacated Terminal E, taking with it a lot of services to places like AUS.