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Mabel

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  Topic: UA/US or UA/CO Merger - Sent 12 Apr 21:41

There's been a lot of speculation lately about UA merging either with US or CO. I would think each has its pros and cons...what are your thoughts?

1. UA/US: Pros: narrowbody fleet commonality (both fly 319/320 mainline and DH8/CRJ/E175 feeder), geographical separation (UA strong in West, Midwest and Asia, US strong in South and East). Cons: lack of widebody fleet commonality (US-Airbus, UA-Boeing), both airlines considered the dregs of the U.S. ''legacy'' carriers by the general public. If this merger happens then the new airline would likely keep the United name and management and have hubs in IAD, ORD, DEN, PHX and SFO, US hubs in PHL, CLT and DCA would be eliminated and WN would likely move in for the kill in CLT.

2. UA/CO: Pros: widebody fleet commonality, geographical separation (CO strong in South, East, Europe), CO's good management and good reputation with the general public). Cons: lack of narrowbody commonality (UA: Airbus, CO: Boeing). If this merger happens then the new airline would likely keep the Continental name and Continental management and have hubs in EWR, ORD, IAH, DEN and SFO; UA hub in IAD and CO hub in CLE would likely be eliminated and AA would establish a hub at IAD.

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FLX

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  Topic: UA/US or UA/CO Merger - Sent 13 Apr 8:38

It's a very interesting topic and to a certain extent, I do believe<About 60:40 odds> UA will announce a merger either with US or CO within the nex 24mths.

As for which way, UA+US vs UA+CO, this merger will go, the Pros & Cons U hv raised are all possible considerations. However, fleet commonality doesn't seem to be a strong deciding factor. Just look @ DL+NW, their entire active mainline fleet types prior to merger practically had nothing in common except 757<M80 and DC9 only hv very marginal commonality>:
DL:
M80/737NG
767
777

NW:
DC9/320
330
744

For this reason, it's pretty clear that either UA+US or UA+CO, fleet commonality will be much less of an issue than DL+NW is now living with. If it does turn out to be 1 of the deciding factor, I'd say UA+CO is a more likely outcome purely because widebody commonality is more important than narrowbody's in this case. Why? EOS<Econ of Scale>. IMHO, both UA and CO hv reached critical mass for their 320<Over 150units> and 737NG<Almost 200units and counting> fleets respectively long time ago. Yes, with UA+US, overall commonality benefit will still increase with a huge, joint 320 fleet but its incremental benefit diminishes. Contrast that with a UA+US widebody fleet that's gonna hv just 16units of 330 which for sure is further fm any optimal critical mass for a single family. On the other hand, UA+CO will mean joint ops of all 757 and all widebody types in their fleets except UA's 744:
777: CO's 20 + UA's 52 =72
767: CO's 26 + UA's 35 =61
757: CO's 62 + UA's 96 =158

UA+CO will gain significant widebody fleet EOS especially re 767/777 fm the above.

In terms of Geog coverage, either UA+US or UA+CO will be hugely complementary combos just like DL+NW. Overall, however, I see CO brings 90% of everything US can bring to the table PLUS Europe. In fact, I actually think CO is strong not only in S+E Europe but the entire Europe<Possibly with the most Euro destinations of any U.S. carrier> mainly due to its powerful combo of EWR hub+Transaltantic 757s. Simply put, in terms of network size as a whole, I hv no doubt UA+CO can challenge DL's supermacy directly while UA+US will probably still land them some distance behind DL but a solid #2 spot well ahead of AA<Note: I'm not counting any huge LCCs in the ranking>.

In terms of hubs post-merger, I see either combo keeping most of their current hubs except some obvious, same-metro area cases such as IAD vs DCA. If UA+US, PHL will NOT be closed<Just too big to be closed down>, CLT may be, DCA most probably replaced by IAD, PHX probably downsized in favor of DEN. In UA+CO, IAD will continue to stand despite fortress EWR. There're just too many Star buddies flying longhaul to IAD and still need UA+CO connections fm there. CLE may be downsized/eliminated in favor of concentrating @ IAD.

In terms of brand post-merger, what happened to DL+NW was not a rule<i.e. At least 1 side save on re-branding>. Although chances are slim, don't rule out scenarios where both sides hv to be rebranded, e.g.:
UA+US: United Airways...keeping UA code
I agreed relative to UA, awareness of the US brand is largely limited to within the U.S.

UA+CO: United Continental, Continental United....no idea what code it'll use.
Here is a tricky one, both brands enjoy equal awareness domestically and pretty much globally. The only possible exception may be Asia-Pcf where UA brand has been flying the big mkts there much longer than CO and viewed upon as some sort of PanAm successor. I can confidently guess that today, the most widely recognizable U.S. airlines brand still alive in Asia-Pcf mkt has to be UA. 9 out of 10 pax based in Asia-Pcf and hv flown with both UA and CO simply can't detect the supposed customer service superiority of CO over UA. Frankly, UA services are quite competitive on Pacific routes and bear no resemblance to UA domestic.


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Mabel

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  Topic: UA/US or UA/CO Merger - Sent 13 Apr 15:51

Good points, FLX. My bets would be on UA/CO mainly because CO is a much better managed and more profitable airline than US. If this one happens it would likely be CO's management team in charge of the new mega-carrier and I really do think it'll be the Continental name that survives. As for your comment about the IAD hub, I would think the Star carriers would quickly shift their ops to EWR because of the more lucrative NYC market and the mediocre facilities at IAD (not to mention that hell-hole that is JFK). However, IAD would likely remain as a ''focus city'' for domestic flights because of the high demand for business travel to the Washington area, with flights to LAX, LAS, SEA, LGA, BOS, MIA/FLL and MCO in addition to flights to the hubs.


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J.M

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  Topic: UA/US or UA/CO Merger - Sent 14 Apr 2:19

UA sounds despriate to merge with an airline....


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FLX

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  Topic: UA/US or UA/CO Merger - Sent 14 Apr 7:37

I wouldn't call it desparate. It's just a natural evolution of this industry...

As the global travel mkt recovers, I guess it's critical for airlines to get into the best possible position/launch pad quickly to compete/fight for customer$ again. That best possible position/launch pad often means instantly larger op scale+network+rationalization opportunities for major/legacy airlines. Witness what's going on @ BA+IB=IAG and U'll see what UA is trying to do is not all that diff....

Look around the U.S. and EU mkts today, each big guy in the game partially or fully owns/absorbed at least 2 or more major brands on his portfolio:
AFKLM: AF,KLM,AZ
LH: LH,LX,OS
DL: DL,NW

None of these individual brands are small potatoes prior to their M&A<Merger&Acquisition> and each serves @ least 3 continents. So we're no longer talkig about e.g. a large longhaul/national carrier absorbing a regional outfit to achieve better traffic feed which has been a common thing to do in the industry since worldwide airline dereg decades ago. No, what we're seeing these days is the ultimate industry consolidation: The merging of the largest carriers in each econ jurisdiction/zone.

I recalled back in my college/university days nearly 20yrs ago, my professor in Transportation Economics was explaining various factors contributing to the airline industry consolidation/M&A trend. He audaciously predicted that in a not-so-distant future, only 3-4 global mega carrier groups will exist with the rest of the mkt populated by much smaller niche<LCC was categorized as niche>/regional-only players. What an outlandish idea I thought! Remember, this was a time well before widespread ATI<Anti-trust Immunity> in the U.S., European countries become just 1 EU and the political possibility of OpenSkies. But as the 90s progessed and into this decade, I began to see traces of reality in my professor's crazy vision. These include the formation of the Big3 Global Alliances, widespread codesharing, JV ops+rev$ sharing and finally, the really really gigantic mergers kicked-off by AF and LH a few yrs ago.

Ever wonder why professors @ your college are so well-paid for a cushy teaching job? Because many of them are real genius<Though U often only found out many yrs after U graduated>!


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FLX

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  Topic: UA/US or UA/CO Merger - Sent 30 Apr 10:23

Mabel:
It looks like U're about to win pretty much all your bets if the rumor below turns out to be true, say, in just about 48hrs:
http://www.flightglobal.com/airspace/forums/wow-another-major-merger-united-48473.aspx#56168

Right-on prediction: CO's current CEO will be in charge
Missed target: CO brand will not survive

With the new+bigger DL and UA post-merger, AA will instantly become a distant #3. I really wonder if AA will become further marginalized since I can't see any worthy M&A target remains in the U.S. mkt that will change AA's ranking......unless they pursue the politically very difficult, nex big leap: IAG<Int'lAirlineGroup>


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Mabel

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  Topic: UA/US or UA/CO Merger - Sent 30 Apr 15:37

Yes, I've heard the rumours and read the stories that the UA/CO merger is imminent and the CO brand will go away. I'll be sorry to see it go. CO is the best remaining U.S. legacy carrier in terms of customer service. At least their management team will be running the new mega-airline. We'll see what they plan to do with UA's inferior domestic product and generally crappy attitude towards customer service.

Assuming the merger goes forward, I would imagine the new airline's hubs would be EWR, ORD, IAH, DEN and SFO, with IAD being relegated to a focus city and CLE/LAX hubs eliminated entirely. IAD would likely keep service to the other hubs, plus maybe 2 daily flights to LAX, 1 to LAS, 2 to MIA, 2 to MCO, 4 to BOS, 4 to LGA and maybe 1 to LHR. I would then predict an LCC would quickly set up a hub at IAD, perhaps FL or F9. CO also favors Boeing over Airbus, so I also think the new airline would expand its 787 family orders and perhaps order more 777 family and cancel the A350 orders.

Wishful thinking: perhaps inheriting UA's international configured 763s would free up a 752 or 2 for flights to LPL :-)


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J.M

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  Topic: UA/US or UA/CO Merger - Sent 01 May 23:57

So far I like everything I am hearing about the merge...
but yeah about the CO brand going away, thats just wrong. Although UA might have been founded a longer time than CO, I think CO have a better popularity (like customer feed backs...) than UA

May 3rd is the expected day when they annouce the merge.


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FLX

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  Topic: UA/US or UA/CO Merger - Sent 02 May 11:46

Mabel:
I was under the impression that CO already flies EWR-LPL....didn't know it doesn't.

May be I'm still stuck in this vision about CO has a <752 carpet bomb every corner of the EU fm EWR strategy.....>


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Mabel

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  Topic: UA/US or UA/CO Merger - Sent 02 May 16:35

FLX, alas no, they never have...they fly 752s from EWR to GLA, EDI, BFS, DUB, SNN, BHX and BRS but not LPL. The closest they get to LPL is MAN (served with 764/752 depending on season). I think LPL combined with another small UK airport would work quite nicely, e.g. EWR-BFS-LPL or EWR-LPL-CWL.


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FLX

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  Topic: UA/US or UA/CO Merger - Sent 03 May 12:36

Mabel:
U know what? As more details emerged fm the UA+CO merger annoucement today, I hv found even more of our predictions turned out to be true.

To be continued on the other thread re UA+CO merger.....


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Mabel

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  Topic: UA/US or UA/CO Merger - Sent 03 May 16:49

That $2.99 I paid for the toy crystal ball I bought at Wal-Mart is turning out to be the best money I ever spent...


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speedbird9468

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  Topic: UA/US or UA/CO Merger - Sent 03 May 19:20

If this is the case who is no the biggest? NW/DL or UA/CO


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Lukasz

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  Topic: UA/US or UA/CO Merger - Sent 04 May 11:59

From what I read, if you just added UA and CO, it would be just slightly bigger than NW/DL in terms of both RPMs and revenue. But I'm sure that after the actual merge, rebranding, route reshuffle, etc. the total numbers will be somewhat different than a simple sum of two airlines.


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FLX

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  Topic: UA/US or UA/CO Merger - Sent 06 May 4:45

speedbird9468:
I agree with Lukasz, UA+CO will be slightly bigger than today's DL in certain key aspects. Though overall, I think it's gonna be a very very close call and AA will become a distant 3rd.

Here is the approx ranking of all U.S. majors right before DL+NW merged a couple yrs ago:
1. DL
2. AA
3. UA
4. CO
5. NW
6. US


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