UA and CO seems a go

[Dont call me Shirley]

http://www.nytimes.com/2010/04/30/business/30air.html?src=busln

United and Continental Reported Closer to a Merger
By MICHAEL J. de la MERCED and JAD MOUAWAD
Published: April 29, 2010

United Airlines and Continental Airlines are in advanced discussions on a merger after making progress on how to price the transaction, people briefed on the matter said Thursday......

Okay, for those of us who care about US (even though we love to kvetch and make fun) what now. I fear that US will simply be too small the mega carrier world of DL and UA/CO.
(Much the same as in Europe where the SASs and Olympic face uncertain days in world of AF/KL and BA/IB.

Can US survive and prosper as the smallest network airline? How?
Merge? With what carrier?

AA is a fine airline, but has a sad record of absorbing smaller lines only to dismantle them (OC, QQ, and, more and more, TW.
Some sort of hook-up with RAH/F9?


I fear for the future in spite of the Tempe's attempts at reassurance.

 

[USFlyer]

I still see US being a good fit for AA, labor issues aside. Or, at least a partner in Oneworld. Remember US was an AA partner during the Wolf years.

I also see AS being a good fit for US, but AS seems to be doing just fine in their own west coast niche. This, incidentally, is a good reason why US does not necessarily need to merge. If AS can sustain itself with ANC, SEA and other key west coast routes, why can't US sustain itself with PHL, DCA, CLT and other key east coast routes?

 

[redheadtempe33]

I still see US being a good fit for AA, labor issues aside. Or, at least a partner in Oneworld. Remember US was an AA partner during the Wolf years.

I also see AS being a good fit for US, but AS seems to be doing just fine in their own west coast niche. This, incidentally, is a good reason why US does not necessarily need to merge. If AS can sustain itself with ANC, SEA and other key west coast routes, why can't US sustain itself with PHL, DCA, CLT and other key east coast routes?

Lord PHX never gets any love.
AS does well because: They have lower costs than US and they code-share with anyone and everyone (domestically and internationally). US can only code-share with UA domestically (yet another reason to get the pilots contract re-written).
Personally, I think F9/RAH is a stronger possibilty.

 

[Travelpro72]

I know Jetblue doesn't come with any t/a flying but they are not a small carrier. Wouldn't or couldn't US buying them increase the domestic size a bit while taking out a competitor? Their a/c would sure fit into the company. Hell if Parker was able to convince those to finance trying to takeover Delta I'm sure Jetblue wouldn't be hard. It would give US a bigger domestic operation which could possibly help feet more int'l. I'm grabbing at straws here but I find it hard to believe in my heart of hearts that all the majors merging around US will make business better. I'm just not buying it. Parker better have something else up his sleeve.

 

[bigbusboy]

I still see US being a good fit for AA, labor issues aside. Or, at least a partner in Oneworld. Remember US was an AA partner during the Wolf years.

I also see AS being a good fit for US, but AS seems to be doing just fine in their own west coast niche. This, incidentally, is a good reason why US does not necessarily need to merge. If AS can sustain itself with ANC, SEA and other key west coast routes, why can't US sustain itself with PHL, DCA, CLT and other key east coast routes?

AS is also a good fit for AA. So is B6. Who brings more value to AA? US, AS, or B6? Or, any combination of the three? I ask this question because, assuming the UA/CO merger is a go, AA probably will be forced into becoming a player in the merger frenzie.

 

[IberiaMAL]

With everyone saying that US Airways will go down if Continental and United merge because US will just not be able to compete with "mega airlines" .... do you think this merger could get passed?


If this merger did pose a threat to US, US in my opinion should;

1.) Oppose the "mega carrier" merger deal
2.) Reiterate facts that it's anti competitive and United would control ~50% of both the Atlantic and Pacific.
3.) Reiterate the fact that this merger could mean that other airlines couldn't compete against a "mega carrier"
4.) Jump ship to One World


Basically, US should emphasize that Delta and United would be mega carriers that would force airlines out of business and highlight the dominance of United/Continental across the Pacific and Atlantic.

I'm sure Delta, American, and others wouldn't mind helping US's cause in stopping this merger.

 

[SparrowHawk]

AS is also a good fit for AA. So is B6. Who brings more value to AA? US, AS, or B6? Or, any combination of the three? I ask this question because, assuming the UA/CO merger is a go, AA probably will be forced into becoming a player in the merger frenzie.

This is why IMO US Airways should at least attempt to control it's own future by finding a merger partner on it's own.

String together 2 good quarters and get the money guys on board, go out and buy an airline with compatable fleet types and a route structure that overlays well. Get the deliveries back on schedule for the 330's and boost the TATL and get South America growth on track. I maintain that this can be done and should be done with all deliberate speed.

 

[rvolkcpa]

Lord PHX never gets any love.
AS does well because: They have lower costs than US and they code-share with anyone and everyone (domestically and internationally). US can only code-share with UA domestically (yet another reason to get the pilots contract re-written).
Personally, I think F9/RAH is a stronger possibilty.

Will a UA/CO merger result in more code-share opportunities for US on flights that CO operates and vice-versa?

 

[bigbusboy]

This is why IMO US Airways should at least attempt to control it's own future by finding a merger partner on it's own.

String together 2 good quarters and get the money guys on board, go out and buy an airline with compatable fleet types and a route structure that overlays well. Get the deliveries back on schedule for the 330's and boost the TATL and get South America growth on track. I maintain that this can be done and should be done with all deliberate speed.

I agree with you, somewhat. This screams F9+B6+AS/US. But, with the exception of F9, AA would badly need the same type of merger after UA/CO. It could become a bidding war and the winner will be who obtains the most financing first.

 

[bigbusboy]

Will a UA/CO merger result in more code-share opportunities for US on flights that CO operates and vice-versa?

Not likely. I predict US's days in Star are numbered.

 

[UALbagboy]

1.) Oppose the "mega carrier" merger deal
2.) Reiterate facts that it's anti competitive and United would control ~50% of both the Atlantic and Pacific.
3.) Reiterate the fact that this merger could mean that other airlines couldn't compete against a "mega carrier"

How can they oppose the merger? They were just trying to create the same type of mega carrier with United a few weeks ago. If they try to oppose it then LCC/UAUA will never merge because the regulators will remind them of what they said.

By the way, Delta is a MEGA CARRIER! So what, the rest of us should stay small and let Delta crush us? We have to react to Deltas size.

 

[BoeingBoy]

I always figured that any "lower 48" carrier that bought AS would screw it up inside a year. The intra-Alaska market is like no other market in the country. As far as I know, AS is the only U.S. carrier that serves EAS markets with mainline equipment because air (or water during the summer months for coastal "cities") is the only way to reach a number of "cities" in Alaska, You can't even drive to the state capital. The only rail line is between ANC and FAI.

Cargo/freight is also a lot bigger part of the intra-Alaska network than any "lower 48" carrier. For example, US had 3X the passenger revenue that AS had in the first quarter, but AS made 2/3 as much as US on cargo/freight. Those mainline planes going to all those...well, really settlements in Alaska carry as much cargo/freight as people - the front half the cabin will be a freight compartment and the back half will be for the passengers.

I figure that any carrier that purchased AS would concentrate on the Seattle hub, ANC, and FAI, with ANC/FAI having over 50% of the population of Alaska. The real goldmine is connecting all those small outllying communities with the rest of the world.

Jim

 

[767jetz]

With everyone saying that US Airways will go down if Continental and United merge because US will just not be able to compete with "mega airlines" .... do you think this merger could get passed?


If this merger did pose a threat to US, US in my opinion should;

1.) Oppose the "mega carrier" merger deal
2.) Reiterate facts that it's anti competitive and United would control ~50% of both the Atlantic and Pacific.
3.) Reiterate the fact that this merger could mean that other airlines couldn't compete against a "mega carrier"
4.) Jump ship to One World


Basically, US should emphasize that Delta and United would be mega carriers that would force airlines out of business and highlight the dominance of United/Continental across the Pacific and Atlantic.

I'm sure Delta, American, and others wouldn't mind helping US's cause in stopping this merger.

Good luck with that.

Guess what. DL is already a mega carrier, so you would need to oppose that first. Oh wait a minute... it already happened. Oh well. Too late.

There are very few regulatory hurdles in the way of UA and CO because there is very little overlap. UA and CO were not competitors in any major markets. Hence they will not be gaining very much additional coverage in any one market or create any monopolies. It really is the ideal merger for both companies. I think AA will still be able to compete well with their strength in Europe and South America. DL and UA will slug it out in the Pacific and be the major players there.

Everyone else better concentrate on their niche. SW is still SW and their model is strong. If US decides not to continue to participate in STAR, then your best hope is for US is to reinvent itself as a real LCC and not just in name. Pinning your hopes on another merger is misguided, and there is only so much room in the market for airlines like SW, Jet Blue, Virgin America, and Airtran. US needs to act quickly and decide which direction to go next.

 

[SparrowHawk]

I agree with you, somewhat. This screams F9+B6+AS/US. But, with the exception of F9, AA would badly need the same type of merger after UA/CO. It could become a bidding war and the winner will be who obtains the most financing first.

The horse race to financing between US and AA would be almost as entertaining as the pilot saga. IMO if AS enters the equation it needs to be the aquiring company due to their unique inter Alaska operations. Long years ago one of the "Killer B's" explained the whole AS Alaska EAS operation. As Jim mentioned the TFB's (Tempe Frat Boys) would screw that up in a NY minute.

Question, would LH's interest in B6 make them easier or harder to aquire? US is in Star Alliance, but then there is a persistent rumor that LH CEO Mayerhuber and Parker are not best buds so who knows.

To me AS doesn't fit due to the above mentioned uniqueness and it's an all Boeing Fleet except for the Q-400's at Horizon.

Also what value would B6 be to US beyond one less east coast player with some west coast routes?

What of B9 and US? Who is worth more? Who would likely be the aquirer? are the fleets truly compatable engine wise and otherwise?

 

[BoeingBoy]

The horse race to financing between US and AA would be almost as entertaining as the pilot saga.

Well, sitting on about $4.5 billion in cash gives AA a head start. But I expect any big mergers to follow the DL/NW path - stock swap - unless it's a hostile takeover when part might be in cash. Even Republic, which owns F9, has an enterprise value over half of US'. B6's enterprise value is almost as much as US'.

Jim