Potential Continental merger

[crossfeed]

Everyone knows United is going to merge with Continental in the near future, why not merge now, and get it over with? I think Glenn should just come out and say, 'here it is, lets make it work', and get on with the obvious.

 

[jimntx]

I see the advantage for United. What would be the advantage for Continental to merge?

 

[phllax]

Not to stir the pot, but the only advantage for CO is either the SFO or LAX hub and Pacific/Asia service, which they could pick up at the fire sale if and when the tulip dies.

 

[jimntx]

Precisely. Let's look at recent history...

1. The debacle that my airline (AA) made of the AA/TWA combination--let's not argue about whether it was a merger or purchase. It doesn't matter now.
2. The ongoing mess that the AWA/LCC merger represents.
3. The yet-to-be-determined fallout from merging the largest non-union airline workforce with one of the largest very unionized workforces (DL/NW).

Given this so far, I fail to see why anyone would consider any strategy in the future other than to let the failing airline fail, and take their chances at the yard sale after the funeral. Ok, so you may not get the SEA-NRT route or the LAX-PEK. The opportunity will arise again.

 

[HottootrotNyc]

Everyone knows United is going to merge with Continental in the near future, why not merge now, and get it over with? I think Glenn should just come out and say, 'here it is, lets make it work', and get on with the obvious.

Well what you and all these "Everyones" think, is WRONG. Continental and United won't be merging. United has been proven to be in the worst financial shape of any airline in the United States. Over a year ago our CEO declined a merger, this year they are burning the furniture (so to speak), to keep cash levels up. The only think Continental wants from UAL is the West coast and Asia. The rest the airline has built and can continue to build on it's own.

If UAL hits Chapter 11 or Chapter 7, and the sale of assets begins, the company can purchase what it wants and hire off the street. Instead of attempting to merge with an airline with a very senior work force. The pensions for the additional 17,000 Flight Attendants alone would cripple the company. So sorry Arm Chair CEO, no one wants this merger, no one hopes for it, and thankfully it never will!

 

[Borescope]

If UAL hits Chapter 11 or Chapter 7, and the sale of assets begins, the company can purchase what it wants and hire off the street.

This is true, but don't think that Continental will be the only one bidding on assets.

 

[FWAAA]

Given this so far, I fail to see why anyone would consider any strategy in the future other than to let the failing airline fail, and take their chances at the yard sale after the funeral. Ok, so you may not get the SEA-NRT route or the LAX-PEK. The opportunity will arise again.

You're probably right, but a merger before liquidation provides a couple of benefits:

1. Delta and Northwest combined when both had huge cash balances, and that cash will probably help DL get thru this winter;

2. Combining before liquidation allows the acquirer to have a better chance at capturing the frequent fliers and higher yield customers, like AA did in STL. The events of September, 2001 and its aftermath, combined with the oil price spike of 2005-08 have undone much of the benefits of the TWA purchase, but AA held onto many of the STL TWA elites. Even though AA has downsized (dismantled, for the cynical) the STL hub, no other airline has expanded all that much at STL, and AA has retained many of the higher spending loyal customers.

If CO (or AA) made a move on UA now and combined in an all-stock deal (like the NW-DL marriage), they might have a better chance at keeping many of the UA customers and would be able to combine their meager cash balances, perhaps helping them thru this winter.

 

[HottootrotNyc]

This is true, but don't think that Continental will be the only one bidding on assets.

Never said Continental would be, what I did say was no one wants this merger to happen. the only people I have ever heard speak happily of the thought of a CO and UAL merger, is UAL employees.

One thing that does amaze me is when Continental was on the brink of closing it's door's back in the day, UAL was praising Continental's demise. They had employees in DEN staffed at our ticket counters offering free F class tickets..... Now look whos begging..... 😀

 

[FA Mikey]

Who is begging? Thats in your own little mind. Its a bit premature to count UAL out. I also wouldn't discount the fact that in this time, you could find yourself in theirs shoes very quickly.

 

[HottootrotNyc]

Who is begging? Thats in your own little mind. Its a bit premature to count UAL out. I also wouldn't discount the fact that in this time, you could find yourself in theirs shoes very quickly.

LOL, Hi pot! Kettles out!

It's a bit premature for nothing, the financial status of an airline can't be lied about. It's just most are to blind to put it lightly to open up and see what is actually going on. Take for instance American Airlines, the Flight Attendants are being furloughed almost a decade back. Such a sad state the airline is in. UAL, has been failing for years and sadly strong airlines that have the credit to back them up will be around to pick up the pieces. The only airline able to do that is Continental.

 

[HottootrotNyc]

So much for it being in my own little mind!

"Summary

1. Airlines take a long time to die - an average of about 15 years from initial troubles to final liquidation - witness the struggles of PanAm, Eastern, TWA
2. Today's environment may push the next carrier over the edge, as cash positions at several major carriers are quite weak, and losses in a traditionally strong quarter don't bode well for the coming traditionally weak quarters
3. United, US Airways and American are the three carriers at risk for another round of bankruptcies in late 2009 "

 

[crossfeed]

I think there is too much money to lose if United were to cease operations. If Continental and United were to merge, being able pick up UAL customers is a big thing. I do not think Chase, or the democratic party with United's connections in San Francisco and Chicago would let it happen, United is too big, and too connected to fail. IMHO.
It is now possible for a flight attendant to get a pilot pregnant.
— Richard J. Ferris, President, United Airlines.

 

[HottootrotNyc]

They said the samething about Pan Am, Eastern, and many others before. I am not saying I want UAL to faulter and all those people to be out of work but who is going to fork out the money to run a money losing operation, for eternity?

Connections mean nothing and I sincerely doubt, other companies and organizations are going to continue to pur money into a company, simply because it's "to big to fail", makes no sense.

 

[casual rat]

The Taxpayer comes to mind...as far as the 'forker' you mentioned goes.

 

[JFK Fleet Service]

A La Amtrak?

The National Railroad Passenger Corporation, doing business as Amtrak (reporting mark AMTK), is a government-owned corporation that was organized on May 1, 1971 to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "American" and "track".

All of Amtrak's preferred stock is owned by the U.S. federal government. The members of its board of directors are appointed by the President of the United States and are subject to confirmation by the United States Senate. Common stock was issued in 1971 to railroads that contributed capital and equipment; these shares convey almost no benefits but their current holders declined a 2002 buy-out offer by Amtrak.

Amtrak