Who’s Buying Who And Merging And What Now?

So what in the hell is exactly going on these days?

First, AMR, the parent company of American Airlines (but then again if you’re an airline junkie like I am, you already knew that!), filed for bankruptcy.  And almost immediately, there were rumors swirling around about Delta possibly putting together a bid for AMR.  And then there were rumors about another group (TPG Capital), a private equity firm, also looking into buying AMR with the help of British Airways.  Finally, there was a rumor of US Airways buying American Airlines.

Now there’s a rumor that Delta is thinking about buying US Airways.

What the hell?

Honestly, now that Delta is tied up with Northwest, SkyTeam Alliance (474M pax/year) is very well positioned in the United States.  American, now the third largest airline in the United States (and probably going to shrink considerably based on their bankruptcy) is oneworld (303M pax/year), which is having all sorts of problems.  I mean JAL, long-time OneWorld partner almost bailing?  Wow…  And on the other hand is United/Continental and US Airways as part of the Star Alliance (604M pax/year).  And with United/Continental being as gargantuan as they are, is it really doing US Airways any good being part of Star Alliance?

What should probably happen (in my personal airline-geekdom opinion) is that any bid by Delta be tossed out.  Delta is already huge; should the be allowed to get even bigger?  But US Airways?  If they want to stay viable with the big boys, I think they need to do two things.  First, they need to bail on Star Alliance and join up with oneworld.  This would make the playing field a little more equal with Star Alliance (minus US Airways) at 543M pax/year, SkyTeam Alliance still at 474M pax/year, and oneworld upped to 365M pax/year alliance-wise.  That would be a first good step.  And then, just like Continental bailing on SkyTeam and then United buying them (keeping the United name but the Continental brand, thereby shedding a bad image since Continental was more well liked than United), US Airways needs to buy American Airlines, and shed their US Airways image (though take over the company, again a la Continental CEO Smisek taking over United post merger).

Just my personal opinions about what needs to happen with the big guys.  We’ll see how it plays out.  And in the meantime, maybe I should put together some ideas for the smaller carriers.

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What is United getting out of the Continental merger?

In a word: EVERYTHING

When you hunt around chatrooms and talk to people who fly regularly, there is not a lot of good that is often said about many of the major airlines (United, American, etc).  The thing is, though, Continental always bucked that trend.  They always ended up on the good side of the customer loyalty and comment section of airline surveys.

United?  They were always in the toilet.  They deserved it, though.  My flight on Horizon got canceled due to mechanical once, and since I’ve got status with Alaska/Horizon, they put me on a United flight, with a connection in San Francisco.  I got to my gate and proceeded to listen to the gate agent bad-mouth United passengers for 10 minutes — LOUDLY — before boarding said passengers.  And it’s not like she did it behind a curtain or anything.  She was standing AT the service desk, talking to other United people.

Yes, there are travelers that like United, I’ll give you that.  But they were the exception, not the rule.

Now it’s coming out that United is going to merge with Continental.  Honestly, it’s not a huge surprise.  Continental, United, and US Airways made up “Star Alliance”, once Continental bolted from Delta’s Skyteam (which the writing was on the wall when Delta and Northwest both went into bankruptcy the SAME day).  Continental bolstered Star Alliance.  Now with the merger, two big facts have come out.  Yes, the United name is staying.  BUT:

  1. The CEO of Continental, NOT United is going to run the combined airline
  2. The new livery for the airline, which does include the word “United”, is the old Continental livery (you can see it here).

This is going to allow United to turn itself around, both inside and out.  The old visual feel of United is going away, and the old way of thinking of United is going away.  So in a word, this is the surrendering of United, and a takeover by Continental — just not in name.

A couple of years ago, I predicted United would file for bankruptcy one more time, and then fade away.  Only half of that prediction is coming true.  With the loss of the leadership and the livery, United will be a thing of the past.  And you know what?  That may be a good thing for the airline industry.

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