UA AND US Merger Talks

[gar]

Philly.com

http://www.philly.com/inquirer/business/20100413_Continental_expected_to_make_United_bid.html

read this yah....

No surprise here! I've always thought this merger talk has been about getting Continental to make a move for UA. I don't think anyone will be surprised if the UA/US talks aren't successful. I do hope that it works out for everyone no matter what two or three airlines merge with one another.

 

[jimntx]

Yes but common knowledge will tell you, if UA/US merge (which is fine with me) CAL will be put in a very scary place. It would be considerably smaller than UA/US, AA, DAL... Not only would it be much smaller, and have less market share, but it would find itself competing against PHL for traffic in STAR, which was very similar to its SKYTEAM situation with DAL. Smisek, has already said how much better the STAR partnership is, due to the fact, there isnt overlap between UAL/CAL, but if UAL all of a sudden has southern and PHL presence it would be significantly different. Then, the scenario might become like this..... UAL/US are together, and CAL cant merge with AMR so there arent many options, which would not be good for them. No matter how fabulous and independent you want to be, sometimes, you have to do what you have to do to compete, and trust me, CAL knows that there is no other airline they can go to for Major west coast presence, Chicago, DC, Asia. If they think they can go it alone, GREAT, and good luck to them, I think the cards will play different however, you cant ignore the obvious.

I doubt that CAL will consider themselves in a "scary place." Among business travelers, CAL is considered the top of the line in the U.S. When those business travelers who travel CO domestically go to Europe or South America or the South Pacific, they will still go to EWR, IAH, or LAX as a jumping off place instead of PHL. Based on what LCC employees themselves have been posting here about their onboard amenities, food, etc, why would that business traveler go to PHL to catch a STAR flight when they can do the same thing with their favorite domestic airline in EWR?

As far as being smaller than the rest of us...based upon our (I mean AMR, UAUA, and DL) financial performances over the last couple of years, I have to ask, How's that being among the Big Three workin for ya?

 

[Dont call me Shirley]

. As an east F/A, loosing the USAirways name means nothing to me as long as I recieve a paycheck.

[applause]

 

[Pi brat]

I haven't been on CO for a while, but from the outside looking in I can't see why they would tie themselves to an outfit like UA, unless their management team will be running things and can straighten it out. If they can stay in the STAR Alliance they might be better off letting US and UA drag each other down.

 

[RowUnderDCA]

I haven't been on CO for a while, but from the outside looking in I can't see why they would tie themselves to an outfit like UA, unless their management team will be running things and can straighten it out. If they can stay in the STAR Alliance they might be better off letting US and UA drag each other down.

The chess moves are interesting. I think that Parker has stated that US benefits when other carriers merge. Perhaps the benefit is small, but then so would be the cost of enducing consolidation by 'talking.'

 

[Travelpro72]

Though Parker says it's great for US whether they are involved in a merger or not I see a HUGE, HUGE, HUGE difference between CO standing alone and US standing alone. US standing alone next to the new "mega carriers" will be tough at best. Like I said before though, I believe CO was aware of US/UA talking. Though smaller after a merger of US/UA CO will be quite strong as a stand alone carrier. I doubt US could say the same.

 

[mweiss]

I think that the best case scenario for customers and employees alike would be UA/CO with CO management taking the lead.

Me too. The cynic in me says that's why there's no way it would happen. But I suspect CO's business model would scale to UA's network, provided the system doesn't get poisoned with merger infighting.

How would US figure in? Possibly an asset sale-west pieces to CO/UA, and the east to AA or whomever? Nobody knows.

If I were running CO, I wouldn't want US's west assets. PHX and LAS are both low-margin hubs. I doubt CO can run those profitably. It's not like IAH where the competition is on the other side of the city and there are plenty of CO routes that have no WN counterpart. IAH is CO's gateway to Central and South America. Why duplicate it in PHX unless IAH is running out of capacity to support CO's operation?

Now, maybe AA would want to shift some Central/South America operations to PHX. MIA is good for South America, but not so good for connections between the West and Mexico. But even this is a stretch.

 

[goodgirl37]

Though Parker says it's great for US whether they are involved in a merger or not I see a HUGE, HUGE, HUGE difference between CO standing alone and US standing alone. US standing alone next to the new "mega carriers" will be tough at best. Like I said before though, I believe CO was aware of US/UA talking. Though smaller after a merger of US/UA CO will be quite strong as a stand alone carrier. I doubt US could say the same.

What you need to look at is this, CAL can play their game in EWR and IAH, but that wont keep them alive compared to the others. CAL doesnt have feed and market share east/west midwest/east/west mountain/east/west ... If UAL/US merge, they will have their own considerable NJ/NY/PHL market share and can connect people from midwest/mountain/ even the west and east to places such as Tel Aviv/ Madrid/ Barcelona/ Venice/ Milan/ Shannon/ Dublin/ Glasgow etc.., that would have otherwise went through EWR and connected on CAL.. So, in other words, UAL will not use CAL as much to connect people, they will use US and PHL/CLT for this, bringing CAL loads, passengers, revenue down considerably... CAL does fine in EWR and IAH, but you have to have more than that at the end of the day. People aren't going to fly from ORD, LAX, DC, OHIO, to go n CAL when other airlines offer a MUCH better connecting route network and loyalty program.. Just the way it goes.

 

[wings396]

No surprise here! I've always thought this merger talk has been about getting Continental to make a move for UA. I don't think anyone will be surprised if the UA/US talks aren't successful. I do hope that it works out for everyone no matter what two or three airlines merge with one another.

.
I can't see Tinton and Parker wasting their time and efforts just to get CO to make a move. UA has had an interest in US for almost 10 years, so there must be some reasoning on their side. The CO fleet is not as well matched as the US one given the A-320 family of A/C, which make up nearly all of the N/B A/C in the UA fleet. Not saying that this is a slam-dunk reason to merge with US, but it does have a long term cost savings already in place. CO has EWR, US has PHL, both are an ATC nightmare on any given day with about the same amount of O&D traffic. CO already has a strong presence on the West coast as does UA. While US has some, it is less than either CO or UA at this point. CO has IAH, US has CLT, again another toss-up. Another possibility is some sort of a 3-way deal between UA/US/CO, which has been brought up by several others at one time or another. Only time will tell, and rest assured that NONE of us have any input as to what the final outcome may be.

 

[mweiss]

trust me, CAL knows that there is no other airline they can go to for Major west coast presence, Chicago, DC, Asia.

I can buy the Asia argument, but CO has fine service to the west coast and Chicago. Now, it's true that they don't have good coverage on the north-south west coast routes. Their code-sharing with AS buys them a lot there, though.

What I'm trying to understand is why it's so important to have significant nonstop ORD and IAD service. They're fine markets and all, but what does lacking bigger presence in those markets do to lower their margins elsewhere in the network? It's not about revenue; it's about profits. Adding revenue while decreasing margins just makes the airline weaker. Help me to understand where you're going with this.

 

[usa1]

Yes but common knowledge will tell you, if UA/US merge (which is fine with me) CAL will be put in a very scary place. It would be considerably smaller than UA/US, AA, DAL... Not only would it be much smaller, and have less market share, but it would find itself competing against PHL for traffic in STAR, which was very similar to its SKYTEAM situation with DAL. Smisek, has already said how much better the STAR partnership is, due to the fact, there isnt overlap between UAL/CAL, but if UAL all of a sudden has southern and PHL presence it would be significantly different. Then, the scenario might become like this..... UAL/US are together, and CAL cant merge with AMR so there arent many options, which would not be good for them. No matter how fabulous and independent you want to be, sometimes, you have to do what you have to do to compete, and trust me, CAL knows that there is no other airline they can go to for Major west coast presence, Chicago, DC, Asia. If they think they can go it alone, GREAT, and good luck to them, I think the cards will play different however, you cant ignore the obvious.

I see PHL being down sized, benefiting other carriers that want in there. I see Star member CO's EWR hub benefiting from PHL downsizing.

UA needs a southeast hub, CLT. Theirs a lot of angles here .... but always think STAR, the big picture ...how will it affect the Star Alliance network.

 

[SS255]

I can buy the Asia argument, but CO has fine service to the west coast and Chicago. Now, it's true that they don't have good coverage on the north-south west coast routes. Their code-sharing with AS buys them a lot there, though.

CO's codeshare arrangement with AS ended when CO joined the *A.

 

[gar]

.
I can't see Tinton and Parker wasting their time and efforts just to get CO to make a move. UA has had an interest in US for almost 10 years, so there must be some reasoning on their side. The CO fleet is not as well matched as the US one given the A-320 family of A/C, which make up nearly all of the N/B A/C in the UA fleet. Not saying that this is a slam-dunk reason to merge with US, but it does have a long term cost savings already in place. CO has EWR, US has PHL, both are an ATC nightmare on any given day with about the same amount of O&D traffic. CO already has a strong presence on the West coast as does UA. While US has some, it is less than either CO or UA at this point. CO has IAH, US has CLT, again another toss-up. Another possibility is some sort of a 3-way deal between UA/US/CO, which has been brought up by several others at one time or another. Only time will tell, and rest assured that NONE of us have any input as to what the final outcome may be.

Aaaaaaaggghhhh!!! The possibilities are endless!

 

[JayBrian]

US Airways Execs Meet With Pilot Leaders

 

[wings396]

I see PHL being down sized, benefiting other carriers that want in there. I see Star member CO's EWR hub benefiting from PHL downsizing.

UA needs a southeast hub, CLT. Theirs a lot of angles here .... but always think STAR, the big picture ...how will it affect the Star Alliance network.

I find it very amusing that everyone here is so quick to write-off the PHL Hub. It is one of the few, if not the only US operation that makes money for the company on a regular basis. The W&G regime soon realized this, and went gangbusters with Int'l flying out of PHL as quick as they could get more WB A/C on the property. Don't get me wrong, PHL has it's issues but there is no shortage of passengers who use the airport. Depending on who we are merging with be it UA or AA, someone always has the US system being chopped up, and sold off or being downsized. CLT will get chopped if AA gets involved, PHL and/or CLT are gone if we get hitched with UA, and so on. It's actually funny that everyone alread seems to know what's going to happen before it does. Lots of armchair CEO's is suppose. PHL is on of the few places that US has held its own against SWA, so why not just hand it over to them if we merge with someone.....Who needs all of those silly passengers anyway...