Continental Pre/Post Merger Speculation Discussion Thread
Dec 14, 2006, 9:41 pm
#196
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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.
Dec 14, 2006, 10:18 pm
#197
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Interesting, I flew EWR-DEN tonight in F (upgraded), I am flying greyhound-with-wings TED to DFW tomorrow and then I am flying CO DFW-IAH-PHX (upgarded all legs) on Wednesday. My upgrade success this year as a plat based in EWR is over 70%. Oh wait, my EUA for my PHX-EWR leg on Sunday just came in.... hmmmm, thats odd. I am flying in F for every leg of my trip on CO. I guess upgrades on CO do "come through" every now and then. I just hope than for my leg on TED I dont sit next to a shirtless alcoholic.
Dec 15, 2006, 4:06 am
#198
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Dec 15, 2006, 6:39 am
#199
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AZ however is another matter. How that airline is allowed to fly in the first place beggars belief!
Dec 15, 2006, 11:09 am
#200
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You have to realize that Continental's fleet is one of the most modern of all the legacy carriers because they lease out much of their fleet while other airlines, including United, finance their aircraft. As for United being "dirty" that is subjective, especially if you are going to call them some of the most dirty. It is agreed upon however that CO has a fleet in very great condition.
*UA leases a vast portion of its fleet.
Last edited by FWAAA; Dec 18, 2006 at 10:02 am Reason: Fix coding that wrongly attributed quote to CO757
Dec 15, 2006, 1:51 pm
#201
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I agree that the age of the fleet isn't related to the fact that Continental leases most of its aircraft.
Dec 15, 2006, 10:40 pm
#202
Join Date: Oct 1999
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[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!
Dec 16, 2006, 12:37 pm
#203
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"If deal is done, Continental is seen as the boss"
Full Story
"If deal is done, Continental is seen as the boss"
UAL Corp.'s United Airlines employees may end up taking orders from the management of smaller rival Continental Airlines Inc. should the two carriers decide to merge.
(snip)
"Continental will be the one who will be doing the acquiring, not United," Maldutis said Wednesday as the merger talks were disclosed by people familiar with the discussions. "They've got a stronger management. They've changed the culture at Continental. Tilton and company want to cash out."
A tie-up between United, based in Elk Grove, Illinois, and Continental, Newark Liberty International Airport's largest carrier, would create the world's largest carrier by passenger traffic, overtaking AMR Corp.'s American Airlines. With no public proposal on the table, Maldutis and other analysts are assessing what a merged carrier might look like.
Under CEO Larry Kellner, Houston-based Continental is one of the best-managed U.S. airlines, said Jon Ash, president of InterVistas-GA2 consulting firm in Washington. Its shares have more than doubled this year to lead the Bloomberg U.S. Airlines Index.
"If there is a combination, I'd see Continental taking over United and, in effect, running it," Ash said.
(snip)
The airline posted profits in four of the past six quarters. Fourth-quarter earnings are projected at 25 cents a share, according to estimates from 10 analysts compiled by Bloomberg.
Analysts Susan Donofrio of Cathay Financial and Jamie Baker of J.P. Morgan Securities Inc. this week revised their outlook for the quarter to a loss from a profit after the airline forecast higher costs and lower-than-expected revenue.
"Continental is the prettiest girl at the dance party right now," said Darryl Jenkins, an independent airline consultant in Marshall, Va. "They're the best-managed among the legacy carriers over the longest period of time.'
Continental has declined to comment on the merger talks. United spokeswoman Jean Medina said the carrier has "a solid platform with the right team and the right plan that is delivering results."
(snip)
UAL Corp.'s United Airlines employees may end up taking orders from the management of smaller rival Continental Airlines Inc. should the two carriers decide to merge.
(snip)
"Continental will be the one who will be doing the acquiring, not United," Maldutis said Wednesday as the merger talks were disclosed by people familiar with the discussions. "They've got a stronger management. They've changed the culture at Continental. Tilton and company want to cash out."
A tie-up between United, based in Elk Grove, Illinois, and Continental, Newark Liberty International Airport's largest carrier, would create the world's largest carrier by passenger traffic, overtaking AMR Corp.'s American Airlines. With no public proposal on the table, Maldutis and other analysts are assessing what a merged carrier might look like.
Under CEO Larry Kellner, Houston-based Continental is one of the best-managed U.S. airlines, said Jon Ash, president of InterVistas-GA2 consulting firm in Washington. Its shares have more than doubled this year to lead the Bloomberg U.S. Airlines Index.
"If there is a combination, I'd see Continental taking over United and, in effect, running it," Ash said.
(snip)
The airline posted profits in four of the past six quarters. Fourth-quarter earnings are projected at 25 cents a share, according to estimates from 10 analysts compiled by Bloomberg.
Analysts Susan Donofrio of Cathay Financial and Jamie Baker of J.P. Morgan Securities Inc. this week revised their outlook for the quarter to a loss from a profit after the airline forecast higher costs and lower-than-expected revenue.
"Continental is the prettiest girl at the dance party right now," said Darryl Jenkins, an independent airline consultant in Marshall, Va. "They're the best-managed among the legacy carriers over the longest period of time.'
Continental has declined to comment on the merger talks. United spokeswoman Jean Medina said the carrier has "a solid platform with the right team and the right plan that is delivering results."
(snip)
Dec 16, 2006, 1:52 pm
#204
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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.
Dec 16, 2006, 1:55 pm
#205
Join Date: Feb 2001
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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)
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)
Dec 16, 2006, 2:42 pm
#206
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Dec 16, 2006, 2:47 pm
#207
Join Date: Jul 2005
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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.
Dec 16, 2006, 3:54 pm
#208
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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).
[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.
]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?
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.
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?
Dec 16, 2006, 4:10 pm
#209
Join Date: Oct 1999
Location: Denver, CO
Posts: 219
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
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.
Dec 16, 2006, 5:37 pm
#210
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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.