ssullivan

No kidding. For domestic US travel, having elite status with CO or NW is probably the best option, especially if you want domestic upgrades. I'm perfectly happy flying in business class within the Sky Team alliance when I travel overseas, and usually flying in first class on mainline equipment domestically, without worrying about 500 mile upgrade certificates and such.

Although, SWUs would be really nice... even if it's just one or two after 100,000 EQMs.

supermasterphil

Exactly that's the point. CO is fine and maybe great but what about the rest.

I agree that US and UA are not the best airlines and a lack within Star Alliance but UA is not that much worse than CO. They are pretty descent. So kicking US out of *A and bringing CO in, it would be a perfect match.

pbarnette

I am not sure I get the love for LH. Sure, their F product is probably nice (never done it), but the J product is ancient, and Y is pretty meager. I don't see the huge difference between them and AF. I would agree that BA is better than any ST carrier in all classes, but they have their own problems.

STT757

Whether or not to persue a merger, when and with whom are a huge decision for CO.

Ofcourse the best possible scenario would be if assets were to become available for CO to acquire, such as..

NWA Narita rights, US Airways LGA slots/terminal, US Airways DCA slots.

If there were to be industry wide consolidation then CO defiently wants to merge with UAL to get access to Narita, Heathrow, Ohare, San Francisoc, LAX, IAD and all those China route authorities.

If not then CO and AS make the most logical pairing.

Similar Corporate cultures and good employee relations.
Complimentary fleets
No overlap of routes
Huge potential to incorporate AS's strong West Coast Domestic operations with CO's International network, especially all those 787 options CO has on order.

AS has a strong hub at SEA which could be a West Coast EWR for a combined AS/CO to Asia, AS's Domestic network and CO's 787s. AS also has a large presence at Portland, a strong presence at LAX and a decent presence at SFO. All of which could become International gateways, there's strong potential at LAX and SFO for International Gateways. AS's Terminal at LAX would need to be replaced or a MAJOR overhaul ala AA's LAX Terminal, there's also potential at SFO with the former Overseas/International Terminal. A remodeling of that facility could support a really nice sized operation.

entropy

Assets would be best...

in particular, LHR slots.

network-wise UA makes the most sense for CO: strong west coast presence, NRT to add to GUM for the south pacific... LHR.

Unfortunately, UA comes with the UA flight crews... and lousy old planes, including even Airbii, which CO wouldn't want...

If I were to "merge" CO with UA, it would go something like this:
CO management takes over the combined operation, which would be kept separate. Schedules would be coordinated, and FFP would be combined.

The UA A320s and 737's get sold off and replaced with CO 737NGs.
763's, 777s, 747s and 757s get refreshed to CO standards.


I like the AS idea, fundamentally I think it would be great for the domestic system... but AS is a mess operationally and, is very expensive.

ALK: $1.04B / 1.42B RPM/sep
CAL: $3.6B/ 7.3B RPM/sep

CO is 5x as big with major int'l operations, but only 3.6x the mkt cap.

sxf24

For the record, AS' on-time and dispatch rate is currently comparable (or statistically identical) to the other network carriers.

rjque

CO may not want them, but the Airbii have UA's best coach product and really one of the best coach products in the sky. I never feel the need to upgrade on those planes and I don't mind buying last-minute full-Y because the E+ section is almost always available and so extremely comfortable for this 6'4" guy. An extra inch of width + 36" pitch makes for a very nice ride, even on a transcon.

The UA crews aren't so bad, either, but the GA's in UA's hubs are generally terrible.

senatorgirth

Most folks speculating about a UA/CO merger envision CO taking over UA. This overlooks the fact that UA has more ASM's, a bigger route network, larger fleet, and bigger market cap. In a UA/CO hookup, UA is--hands down--the larger and more dominant player. They figure to be driving the bus, not CO.

As for combing FFPs: it has been reported that UA is considering selling off its FFP. Speculation is that they could get upwards of $7.5 B for it, which eclipses UA's current market cap of $5.5 B. If UA were to sell MileagePlus, the deal would certainly mandate continued UA loyalty to MileagePlus. Not true for OnePass. Thus, a merger of UA & CO after a spin-off of MileagePlus would mean the end of OnePass.

Many CO cheerleaders sometimes overlook the fact that the Big Three (AA, UA, DL) are all much bigger carriers than CO. CO, not UA, will be the takeover target.

sfogate

Prior to 9-11, CO at SFO was going to move into the old International Terminal. The move was to place us near both DL and NW (which currently share a terminal). After 9-11 no one had the money to waste in re-doing the old terminal. SFO Airport didn't want to pay for the move nor did CO. 6 years later the SFO Airport is now willing to fund the reburishing of the old terminal due to Southwest returning to SFO. Southwest, USAir, Alaska and CO all share one terminal now. The master plans shows that the gate area that CO is using is slated for demolition, dates unknown.

entropy

Interesting, SFOGate, It would be really nice to have a (much) bigger club in SFO (also beyond security, but the AS club is good for that too).


As for CO taking over UA? Look at HP/US. US was bigger than HP but HP took over, and same with US trying to buy DL.

For the Airbii... CO not wanting them has less to do with the Y product and more to do with the fact that CO doesn't want to fly Airbii.

steve64

How about America West and USAirways ?

Or going back in time....
Texas International and ... Continental ??

In both cases, the name of the larger airline was chosen, but the smaller airline was actually the "surviving carrier".


Steve

cerealmarketer

CO's management is much better connected to some of the smarter money in airline financing (i.e. Texas Pacific) and regarded by nearly every investor as the best network operator (which is why Continental often trades at a premium on a multiple basis to other legacies).

Airline investors are a relatively small community...and it would be a long shot to see a group as qualified as the CO team not run a larger entity.

Larry is also about 10 years younger than Glenn Tilton. Whatever name gets applied or who is the acquireee/etc is a matter of financial engineering. The teams are transferable.

bspencerco

Yeah, we all know the "David's" of an industry never buy the "Goliath's"

entropy

that, and Tilton doesn't exactly have a gold star for employee relations...

J.Edward

Rumor is that DL & NW are seriously considering each other as merger partners.

Here's what interesting about such a merger:
So why is this on the CO + UA thread?

Well for starters if NW merges than CO gains the right to buy back their golden share meaning they'll have more flexibility in pursuing merger partners. Also CO will be able to terminate their marketing & codeshare agreements with NW should they merge with DL. Net effect: CO will be able to untangle themselves for previous agreements hindering a merger.

Likewise the regulators may require NW and DL to drop their codesharing agreements with CO; such a move would painfully highlight CO's position as the '5th wheel' in North America's SkyTeam partners. Moreover regulators may also require CO do drop, or materially modify, their international codesharing agreements with KL and AF.

While CO does not currently use codeshares as extensively as others they still play an important part in producing yields in international operations, and should CO's relationship with NW & DL be replaced by some DLNWAFKL entity, they'll be facing significant competition as well as a material decrease in their international pricing power.

In short it will be CO (well CO and VS) up against DLNWAFKL, UAUSLH and AABA - and the latter players have the ability to engage in price collusion. Net effect: CO looses pricing power while others gain more; DLNWAFKL, UAUSLH and AABA would still be able to engage in extensive codesharing while CO could not.

So if - and this is still a big IF - a merger goes through I think CO will start to seriously consider who they can tie up with.

I do not know what this means.

It may mean CO taking over someone.

It may mean someone taking over CO.

It may mean something else.

It may mean nothing at all.

As a FF on both CO and UA I can tell you that they're worlds apart. Both carriers have their strong points and both have weaknesses. If there was someway to magically take only the good of both without the ills than I'd think a world class airline would be born...but such expectations are not realistic.

I do not see how either airline could be integrated into the other...easily, that is. The products, culture, computer systems and equipment are not the same and I doubt one can simply "combine" the two and produce a quality product.

Who knows...with Glenn's recent trend of selling off bits of UA perhaps Kellner can simply begin to selectively acquire the various jewels of UA much like Wolfe did with PA. Maybe a holding company will be formed and CO + UA will operate similar to how AF + KL do...who knows...

The point behind this rambling posts is simple: I don't really know much about the airlines -- but I suspect a NW+DL merger is more attractive than previous merger attempts due in part to the potential to expand codesharing agreements (assuming they pass regulators). If such a merger were to go through I'd guess it would materially change the landscape of both the international and domestic US market and the US players, especially CO as they'll foreseeable be directly impacted by such a merger, will seek to respond to these changing conditions. Three possible responses are engaging in a takeover, seeking to be taken over or reorganizing into a holding company and operating jointly with others.