United & Mexicana:

United needed Mexicana more than Mexicana ever needed United. Without Mexicana, United has virtually no presence in the Mexico/US market. Bad news for United all the way around.

Strategically, United should have done everything possible to maintain this relationship. By not keeping it, they made it possible for their chief international competitor (AA) to basically lock up all of Latin America. By establishing this relationship, AA has basically assured its continued dominance of this region. That dominance should continue even if access to some restricted markets is liberalized because AA has done everything possible to capture all of the major traffic flows either through its own presence or that of its codeshare partners.

American & Mexicana:

AA already had quite a significant presence in the Mexico/US market. Regardless of what other airlines chose to do in the future, this was going to be a sustainable presence because of the location of AA's hubs and focus cities, ORD, JFK, Miami, DFW, and LAX.

By aligning themselves with Mexicana, however, they ensure that they can stymie whatever plans Continental and Delta/Aeromexico had for the region.

As for Mexicana, AA's track record in the region has proven that AA has no problem coexisting with its codeshare partners. Though LAN and AA still compete on Santiago/Miami routes, LAN's relationship with AA has been good to the extent that both have been quite successful in crowding out the competition (e.g., UA and CO) in the important markets they jointly serve. I am sure that Mexicana will appreciate that added muscle.

As for United, it still has a lot to learn. Dominance in a market is no longer assured by route authorities that are restricted. The future will bring more liberalized agreements. As those agreements are enacted, more and more US airllines will challenge UA on the point to point routes it used to have all to itself (e.g., China, Southeast Asia, etc.). Without codeshare partners in key markets, United's lead in those markets will be quicklly surpassed.

So, whatever anyone might think about Mexicana's customer service standards, this was a big loss for United and its competitors know that.