Agreed. I have heard the same argument applied to American: I don't see how being the farm team for British Airways helps AA. On the flip side, both AA and United have enormous expansion possibilities in Europe if they chose to go that route. In a sense, they're each where Continental was in 1996, but with a much stronger domestic network to feed a larger European footprint. If AA decides to use its B757's to move into smaller markets, it would hurt CAL.

I don't think Ted flies DEN-DFW. Perhaps you are on a United Express flight.

Yes, but it is certainly "the long way around" or "scenic route".

You may want to check your facts on that one. IB is and has been a highly profitable company for some time despite it's bad reputation. Most of the press statements coming out of IB at the moment are posturing and nothing more.

AZ however is another matter. How that airline is allowed to fly in the first place beggars belief! ;)

Not only is the bolded portion factually incorrect,* it makes no sense. Leasing v. Purchase is generally a 6 of one, half dozen of the other calculation.

*UA leases a vast portion of its fleet.

The statement that Continental has the youngest fleet of the major carriers is correct; that piece is true. I don't want anyone to get the impression that Continental has an aged fleet! :eek: I agree that the age of the fleet isn't related to the fact that Continental leases most of its aircraft.

[QUOTE=FWAAA;6854540]Um...mmm, that wasn't a quote by me. Is it possible for you to correct the error and give credit to the party who actually said that statement? Thanks!

"If deal is done, Continental is seen as the boss"
 

If a merger actually happens, I think it makes sense for the more seasoned management team to run the show. However, I wouldn't hold my breath! Strange things happen in mergers. Of course, it's not even clear that a merger will actually happen. If CO management were to take over, someone would have to write a big check to each of the UAUA people to walk away.

I have been following this potential merger, and I see a couple of issues that haven't drawn much attention. Curious about your collective thoughts.

Antitrust issues: I don't recall the government ever taking a macro approach regarding the possibility of too few carriers generally. Instead, the government has seemed focused on competition at specific airports, or on specific routes. My recall of the antitrust problems regarding the United - USAir proposed merger is that the government looked at overlap routes (such as PHL-SFO) and, more importantly, the control that the merged airline would have over Washington DC (with UA's hub at IAD and US's at DCA).

Given that UA and CO do not have any overlapping hubs, it seems to me that any antitrust review will focus on routes where there the two airlines are the only competitors. As far as I know these are:

EWR - SFO
EWR - IAD
EWR - DEN
IAH - SFO
IAH - DEN
IAH - IAD
CLE - DEN
CLE - IAD

Now of these routes, almost all have competitive service if routes to airports in the same metro area (OAK for SFO, JFK and LGA for EWR, DCA for IAD, CAK for CLE, HOU for IAH) are included. If these alternate airports are included in the analysis, the only routes where the CO/UA merger will eliminate competition are CLE-IAD and IAH-IAD. On these routes, WN currently competes somewhat out of BWI, and as long as WN were allowed gates out of IAD for services to CLE and IAH, I just don't see antitrust issues being a major concern.

LHR/NRT access: The general assumption is that CO will acquire UA to avoid NW's veto. In that case, can CO acquire UA's slots at LHR and NRT? I recall when UA acquired Pan Am's slots at LHR, and AA acquired TWA's slots at LHR, the British gov't took the position that this was not allowed under Bermuda II. At that time Bermuda II was renegotiated to, among other things, give Virgin access to LHR-USA flights. If CO were to acquire UA, would there be a further round of negotiations on this? Is there an equivalent issue for NRT?

As a side question here, would the CO/UA merger enable "open skies" at LHR to finally begin (given that, afaik, CO was the last opponent inasmuch as DL and NW depended on AF and KL to give them slots).

EWR access: The consensus on this board (which I believe to be correct) is that CO maintains its presence in Terminal A in part to prevent low fare carriers (Kiwi back in the 90's, Jet Blue currently) from developing a significant presence. If CO and UA were to merge, what would happen to UA's gates in Terminal A. Assuming that CO and UA keep the same number of flights, would flights to Denver, Los Angeles, and/or San Francisco be added to Terminal A? More generally, would a CO/UA merger have as a possible negative effect for these companies the possibility of EWR being more opened up to low fare competition?

As a side question regarding EWR, assuming that CO would enter * alliance, the logistics of that airport's operations would become more confusing. You would have
Terminal C - the bulk of CO's operations
Terminal A - BOS,DCA,IAD,ORD,MDW,ATL,DFW (plus potentially DEN,LAX, SFO) as well as Air Canada's operations (which I assume would be codeshared)
Terminal B - all the *A operations that would be codeshared (LH, SK, SQ,TP,LO)

This could make EWR even more of a connecting nightmare.

Thoughts? (Sorry this is a long post)

Are you blind to any sort of facts? United Airlines cannot fly to London Heathrow from Denver, so what is the point? There is no market for Dener-Frankfurt, Denver-Brussels, etc. As for going the other direction, United already has Pacific gateways in LA and San Francisco. Perhaps Continental would have used it differently, because they didn't have SFO or LAX:rolleyes:

I attempted to edit that post, but the website didn't respond.

My point was that United finances a significantly larger portion of their fleet than Continental. United owns nealy all of their 747-400 aircraft and about half of their 52 777-200s and 35 767-300ERs. Furthermore, they own the 737s. Continental doesn't own close to half their fleet. Again, this is a blessing or a bad spell from different perspectives.

The government would certainly look at any kind of merger between CAL and UAUA--not only the US government, but certainly the EU too. It's difficult to know what they would conclude. The government may call in help from academics to determine what, if anything, should be done.

[The cynic in me recalls that CAL and UAUA may have had non-standard business dealings in the past. Perhaps it is just a coincidence that Continental pulled out of Denver as United started to expand there, while, around the same time, United reduced service to central and south American as CAL moved into those markets. Perhaps they have a mechanism for fixing any thorny issues before the DoJ gets to examine things. :eek: ]


There are two options: acquisition or merger. Most things that the media call an acquisition are actually mergers. An acquisition involves the purchase of the assets of another entity; a merger is a pooling of interest. In this case, it's much more likely that a merger would occur rather than an acquisition. An acquisition would likely leave the acquiring party highly leveraged--certainly more so than if the two entities merged.

NW does get a veto, but everything is negotiable for a price.

Who knows how the British government, or more likely the EU, would see a merger. Since there is likely to be consolidation within Europe too, something would be worked out, I am sure.


I don't think these two issues are related. Foreign ownership of US carriers appears to be the issue.


This question probably falls under the anti-trust question you raised. I think that the government would look very closely at EWR; I think we could expect to see another discount carrier arrive there.

Nope, but you might be experiencing tunnel vision; If UA were to fly Denver - London, BA would be required to fly to LGW (just like UA, like AA does from RDU). That route aside, LH is flying DEN-FRA daily and will begin DEN-MUC next year. Why isn't UA flying that route or at least one of the two? Is it a puppet to the LH? It certainly seems that is possible.

How do you know what market exist for Denver? It is UA's second largest hub, yet no European or Asian service. While SFO is better than LAX for passenger facilities; neither compare to DEN.

Actually, CO used to have HQ and sizeable ops out of LAX; but times changed (along with management). Perhaps, if this marriage occurs, then CO will step up to markets where UA doesn't seem to find profitable.

Regarding route overlap - IAH-DEN. It is flow by UA, CO, and F9. Southwest also now flies DEN-HOU, so lots of competion Denver-Houston.