Weatherboy

I think the US government would think otherwise.

J.Edward

If the DO's going to drag their feet on a DL+NW merger do you think a DL+UA merger will be met with any less resistance?

IADSIN

What might be interesting, and hasn't been discussed explicitly so far, is a deal whereby CO buys *the assets of* UA (including branding, slots/gates, and IPR) -- but does not buy UA itself. That lets it sidestep UA obligations, like union contracts and awkward merger issues like union seniority list integration.

This kind of deal could make union integration easier (CO would need to hire some new employees, but would not be obliged to hire the ex-UA staff) and would also make the management handoff easier (CO management would be in charge without any UA management baggage).

That style of acquisition has been done in the technology sector and financial sectors for years. Maybe now is the time to do it in the air travel sector.

Btw, I think a lot of UA FF folks accustomed to upgrading on international flights are going to be surprised how much harder it will be to upgrade to the "new" C/F cabins once those cabins are widely deployed in operational aircraft. The number of seats in each cabin generally drops a bit -- and the improved product is likely to attract more paying C/F customers. This hasn't hit home yet in the UA FF community, but it likely will within the next 12-18 months. At that point, I don't know that upgrades on UA would be much better than at present on CO.

bernardd

Sorry but the Unions can kill this in a heartbeat. How many crew does CO have that are able to fly 747-400's? Or A319's & A320's? The Union would have a gun to CO's head if they tried this, because even if CO has people who can operate 737's, 757's and 777's they certainly don't have enough of them spare to take over all the UA operations.

Mackieman

Financial Times (via MSNBC) posted a story today that quotes UA folks as saying they may reopen talks with CO if DL choses not to merge with UA.

http://www.msnbc.msn.com/id/22734916/%23storyContinued

United Airlines is considering a new round of talks to merge with Continental Airlines if its negotiations with another rival, Delta Air Lines, end without an agreement, people familiar with the company's plans said.

Glenn Tilton, United chief executive, an outspoken proponent of industrywide consolidation, signalled on Friday that the Chicago-based airlines could still strike a deal even if Delta merges with Northwest Airlines. Delta opened negotiations with both United and Northwest earlier this month, the people said...

CO 1E

That was in last weekend's Weekend FT.

discoverCSG

Am I the only one who remembers DL and NW filing Chapter 11 in the same courthouse on the same day?

While I'm not usually a conspiracy theorist, I can't help but suspect the following:

DL and NW have a mutual desire to merge: NW wants this because doesn't see a bright future for itself; NW wants DL as a partner to mirror the AF-KL arrangement. DL wants NW because they get NRT, DTW, MSP, and little resistance to retaining a DL HQ in ATL. Fleet integration will be a challenge, but nothing they can't handle.

DL's board is going through the motions of merger talks with UA in order to get the most favorable terms from NW, or at least to be perceived as doing so. DL prefers NW for its route network - no DEN/SLC problem, for example. CVG and/or MEM will be easier to let go.

UA, like NW, sees itself as a problem-riddled airline with some valuable assets (Asia and LHR slots, SFO and LAX) but a bleak future as a whole airline (competition at DEN, congestion and competition at ORD, little presence in NYC, and general profitability issues). UA would prefer a CO merger/buyout, but would consider DL to be an acceptable partner, too (with hubs at NYC and a large southern market). UA knows they probably won't get DL.

When DL and NW announce their merger, CO and UA will each know that the other is the only viable remaining partner. This works great for UA, because they get to add CO's modern fleet, EWR hub and Europe routes, IAH hub and LatAm (not to mention southern USA) routes, and so forth. CO benefits because it can join STAR (it's an oddball in SkyTeam, methinks). STAR benefits most especially by gaining the NYC presence. SkyTeam doesn't hurt that much, because it still has DL/NW covering most of the overseas markets CO serves.

All this works out too well (if indeed this scenario is close to what actually plays out), in my opinion not to have been planned by someone.

What think y'all?

Lurker1999

My feeling is that DL/NW would be a less painful transition than CO/UA would be. Cutting UA apart piecemeal may be the easiest way of accomplishing it. The combined carrier could still carry the United name but with Continental's management, fleet structure. Labor will be a huge problem. I just can't see fitting UA's employees into the CO workforce.

Babu

I wish UA and CO would just hurry up and get into bed with each other (with me in it)!

HeathrowGuy

As a CO FFer in every sense of the term, and having witnessed the disruptions that a merger and the post-merger integration bring to an airline, I do not believe that I come out objectively ahead under any merger scenario unless NWA is the partner.

IADSIN

NOTE WELL: I don't ever believe in conspiracy theories.

I do agree that either (DL+NW) or (NW+CO) are easier mergers to pull off than anyone+UA. I also agree the route-map integration is easiest for (DL+NW).

That said, UA's current senior management have said that they would be willing to do a deal where they left after the merger. So regardless of how a CO+UA deal were marketed/positioned/advertised, one imagines the end reality would be that CO's current senior management would end up running the merged airline.

If that analysis is right, and the deal actually happens, the resulting airline might end up looking A LOT more like current CO than current UA by ~3 years after the merger date, except possibly (I hope) being in *A rather than SkyTeam.

For example, UA's upgraded front cabins are much more similar than their current front cabins. In the new configuration, both front cabins have 180 degree lie flat seats and similar seat features. UA is not known for stellar in-flight service in any cabin. At that point, why not use the "BusinessFirst" model and have only 2 classes of service ? Even industry-leader SQ has a fair number of international 2-class aircraft (e.g. 772 between SIN and KIX).

I do think that CO would benefit on domestic routes to have either some kind of E+ wider-pitch seating on the long-haul RJs or have 2-class long-haul RJs. For the short-haul runs, pure single class is fine, but IAH to either coast in a single-class narrow-pitch RJ is too painful at present.

All that said, union seniority list integration is impossible to do in a way that everyone is happy. There are thousands of other details that need to be sorted out and it seems really unlikely any airline deal (for any pair of airlines) will be smooth for passengers/staff during the transition.

UA's aircraft fleet is relatively old and continues to age. The only "young" aircraft belong to the contractors operating the United Express fleet.

I like the idea of UA+CO from a route-map perspective, and I personally never fly in First (so a 2-class plane is fine with me), but I still think that any mergers of any airlines will be incredibly painful all around. So I expect that I personally will lose in any merger scenario.

pbarnette

I don't think you come out ahead either. But, I also think that none of the airline heads give a toss about whether you come out ahead. I am just holding tight for now, because that is about the best any of us can hope for.

CO 1E

CO could just get rid of as many of the bad apple UA employees as possible, then retrain the remainder.

senatorgirth

Interesting piece in the Houston Chronicle about a potential CO/UA hookup:
http://www.chron.com/disp/story.mpl/...z/5484546.html

DL+NW would mean SkyTeam for them. Such a merger would practically force a UA+CO combination which would almost certainly be in Star. This might, therefore, require the resulting FF program to be closer to MileagePlus than OnePass. That, in turn, could possibly mean easier upgrades into J/C. Wonder if CO's PC deal with AMEX Plats. would go out the window?

The Chronicle article above references an agreement that UA has with the City of Chicago which ties the airline to the Windy City for a number of years, or else it must pay a multi-million dollar settlement. This would also seem to point to potentially greater influence of UA in a merger.

bocastephen

After my friend's experience with UA' "employees" last night at SFO, I am highly doubtful any of them could be re-trained to provide service according to CO standards.

I still maintain CO should take the widebodies, 757s (refurbish interiors, replace engines and add winglets), premium routes, add a hub in either DEN or ORD and make the other a major 'focus city', turn SFO and LAX into a west coast Global Gateways (emphasizing Asia), expand PS to keep the NYC-centric premium traffic (transcon US and TATL) and dump everything else. I think they would need to dump the United Suites, but need to go back to the drawing board on the next-gen BF to make sure it stands out as the number one premium hybrid product in the world. Also, we would need to dump E+ domestically, but look at a true premium econ product for international flights.

The resulting airline will be called Continental with existing CO branding and the loyalty program would be Onepass keeping Global Services as an unpublished top tier (comped limo to/from airport for paid int'l J, enhanced reward availability, SWUs, etc.).

The United name and brand, often synonymous with uncomfortable cabins, surly staff, a cheap product and other negative connotations, would be gone.