How would the United Airlines and Continental Airlines Meger look like?

United Airlines and Continental Airlines today announced that United Airlines has agreed to buy Continental in a $3 billion-plus deal that would create the world’s largest carrier with a commanding position in several top U.S. cities. Interestingly, the headquarter will move to Chicago IL but it would be run by Continental CEO Jeffery Smisek.

So, how would the merged company look like -

• United Continental Holdings Inc.
• Headquarter - Chicago, IL
• Hubs – Antonio B. Won Pat International Airport (Guam), Cleveland Hopkins International Airport, George Bush Intercontinental Airport (Houston), Newark Liberty International Airport, Denver International Airport, Los Angeles International Airport, O’Hare International Airport (Chicago), San Francisco International Airport, Washington Dulles International Airport
• Fleet Size – 339 (+83 orders) + 360 (+50 orders, 100 options) = 729 (+153 orders, 100 options)
• Current United Fleet – Airbus A319-100, Airbus A320-200, Boeing 747-400, Boeing 757-200, Boeing 767-300ER, Boeing 777-200, Boeing 777-200ER
• United Orders - Boeing 787-8, Airbus A350-900XWB
• Current Continental Fleet - Boeing 737-500, Boeing 737-700, Boeing 737-800, Boeing 737-900, Boeing 737-900ER, Boeing 757-200, Boeing 757-300, Boeing 767-200ER, Boeing 767-400ER, Boeing 777-200ER
• Continental Orders – Boeing 737-800, Boeing 787-8, Boeing 787-9
• Frequent Flyer Club - OnePass or Mileage Plus
• Alliance – Star Alliance
• CEO – Jeffery Smisek
• Revenue – $29 Billion

In response to US Airways plan to merge with United Airlines, Continental CEO Smisek remarked –

“I recognized that United is the best possible partner for Continental,” Smisek said on a conference call. “I didn’t want him (United’s Tilton) to marry the ugly girl; I wanted him to marry the pretty one, and I’m much prettier.”

The merger will make it the number 1 carrier in US, with Delta the 2nd and American Airlines number 3. US Airways will the distant 4th (for US carriers with international carrier).

US Airways should be proud – their merger talks always result in someone else merging.

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US Airways and United Airlines Merger: How would the combined airline look?

US Airways is reported to be in talk with United Airlines with regards to a merger that will create the world’s second largest airline (after last year’s Delta Airlines and Northwest Airlines merger). This is not the first time when US Airways and United Airlines have talked about merger which failed in 2000 amid antitrust and labor opposition.

Both US Airways CEO Doug Parker and United Airlines’ CEO Glenn Tilton, have been champions for the need to consolidate capacity and hubs within the U.S. Parker even tried an unsuccessful attempt to merge with Delta Airlines some 6-7 years back.

So, how would the combined airlines look -

• Hubs - Charlotte, Philadelphia, Phoenix, Denver, Los Angeles, O’Hare International Airport (Chicago), San Francisco International Airport, Washington Dulles
  
• Headquarters – Tempe, Arizona or Chicago, Illinois (Tempe if Parker remains the CEO)
• Fleet Size – 702 (+154)   – from 343 (+104 orders) and 359 (+50)
• Fleet - 
  • Airbus A319-100 (93+6), Airbus A320-200 (70+48), Airbus A321-200 (48+17), Airbus A330-200 (7+18), Airbus A330-300 (9+1), Airbus A350-800 (0+18), Airbus A350-900 (0+4), Boeing 737-300 (24), Boeing 737-400 (40), Boeing 757-200 (26), Boeing 767-200ER (10), Embraer E190 (19+23)
  • Airbus A319-100 (55), Airbus A320-200 (97), Airbus A350-900XWB (0+25), Boeing 747-400 (24), Boeing 757-200 (96), Boeing 767-300ER (35), Boeing 777-200 (19), Boeing 777-200ER (33), Boeing 787-8(33)
• CEO – Doug Parker or Glenn Tilton

• Alliance - Star Alliance
  
• Frequent Flier Program -Dividend Miles or Mileage Plus
• Name - United Airlines (most probably since it has a bigger brand value)

There are speculations that this might trigger talks between United Airlines and Continental Airlines, which, if successful, would mean that US Airways seems to be the right catalyst for merger talks for “other” airlines!

Both US Airways stocks (around +20%) and United Airlines (around +8%) stocks were up due to rumors.

via Mizozo.com

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Yet another US pilot found drunk? United Airlines pilot arrested at Heathrow

United Airlines pilot, Erwin Washington, (51 years old from Lakewood, Colorado) was charged and arrested at London’s Heathrow Airport as he was about to fly a a Boeing 767 with 124 passengers and 11 crew to Chicago.

From Mizozo.com -

A Metropolitan Police spokesman said: “At 12.30pm on 9 November we attended a flight at Heathrow Airport and arrested a 51-year-old man.

“He was arrested on suspicion of being aviation staff performing an aviation function while exceeding the prescribed alcohol limit.”

Police are awaiting the outcome of further tests on the man.

“He was reported to police by United Airlines staff, said a BAA Heathrow spokesman.

A United Airlines spokeswoman said: “Safety is our highest priority and the pilot has been removed from service while we are cooperating with authorities and conducting a full investigation.

“United Airlines’ alcohol policy is amongst the strictest in the industry and we have no tolerance for violation of this well-established policy.”

Pilots legal limit is 0.02 percent and that is equivalent to half a glass of beer. Erwin Vermont Washington, 51, is the third U.S. pilot in 13 months to be arrested for being over the strict alcohol limits imposed on airline staff.

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United Airlines: Pay even more for second bag

United Airlines increased the second bag fees to $50 citing high cost of fuel. The fees will start for tickets bough beginning Tuesday September 16th 2008 for travel beginning November 10th 2008 in US or to/from Canada, Puerto Rico and US Virgin Islands.

The fees will not apply to -
1. First/Business Class
2. Premier frequent fliers
3. Active duty military personnel

Funny but hasn’t the crude oil being going down on downward trend from a high of $147 a barrel to almost $96 a barrel? Do we assume that United Airlines has hedged itself at a higher oil price?

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Good News Everyone: United drops plan for meal charges on overseas flights

United Airlines had earlier announced plans to stop providing complimentary meals on transatlantic flights in economy class. The idea was to let passengers either bring their own meal or “Buy on Board”.

But today, United finally heard the consumers and announced that it has dropped its plans to charge for meals on the transatlantic flights. It is one thing to charge for meals on domestic flights, but charging for meals on a 8+ hour transatlantic flight is ridiculous. Do you expect me to bring dinner and breakfast for the whole family?

Questions for United Airlines for the dropped plan -
1. Did they realize the logistics in stocking for “Buy on Board” flight on a transatlantic flight?
2. Could they have made sure to arrange for special meal requests?
3. How much does it cost for meals on a transatlantic flight? What percentage of the total ticket price?

I am glad they dropped it, since it looked like a business blunder!

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United: Pilots vs Management

Unions hate management and management hates union. Both tend to believe that they are entirely responsible in running the company. Both also seem to have entirely different view on how the airline should be run and how each one of them should be paid. Since 2000, the airlines have gone from bad to worse, with negative cash flow and worse union-management relations.

The union-management relationships for United Airlines are no exceptions. Recently, United Airlines’ union and management were in news for court battle with the airline suing ALPA (Air Line Pilots Association) over illegal work practices.

Charges are as follows -

• Orchestrating work slowdown since 2006
• Flurry of sick days taken by junior pilots in late July 2006 causing 329 flight cancellations over 8 days while disrupting 36,000 passengers
• Sharp increase in maintenance-related delays ordered by pilots over the past year
• Sharp increase in fuel consumption over the past year.

ALPA denies all charges. “The pilots union countered that United was alleging a broader pattern
of abuse because it couldn’t prove the charge that had caused it to
seek an emergency court order in the first place: that ALPA had
directed the flurry of sick days taken by junior pilots likely to lose
their jobs at the summer’s end.” (from here).

On a separate note, ALPA is trying to oust United’s Chief Executive Glenn Tilton. They have a website by his name – http://www.glenntilton.com/ with the punch line “Glenn Tilton Must Go – United Pilots Ask Your Help in Removing an Incapable Leader”.

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Why charging for bags makes sense?

American Airlines started it and then came in United Airlines and US Airways. Now Northwest Airlines is going to charge to charge for first checked bag.

Well, my first reaction – “It is stupid! Now I don’t just pay for the ticket but for my food, drink and my BAGS???. If it is just $15 you want, then why don’t you just raise the air fare by $15 and let me be free of all  the trouble????”

Some sense to it -

• Air Travel is now a Commodity – Air travel for a good time was expensive and hence was classified as a luxury. A luxurious product comes with extras like a BMW might come with 4 year free maintenance, warranty, leather seats and other options with the sticker price. Now the industry has become a commodity where you find the cheapest ticket to fly from A to B (or even C if it is close to B). It is same as buying milk, rice or mints where normally you would go for the cheapest.
• Cost of flying a bag – The cost of flying a bag includes – the air fare of my bag, cost of carrying it from the front counter to the big TSA machines (EDS machines), from the TSA machine to the belly of the flight, and if I am connecting, then transporting it to one flight to another and last transporting it from the plane to the carousal. And if the airline misses loading the bag on one of my flights then it also includes the price of getting it delivered to my address. Don’t you think that your bag is getting more service by the airline then you do and you didn’t even pay for it????
• If I don’t check-in one, I pay for other passenger’s bags – Should I be paying for a service that someone else uses? It is like going to a restaurant and being a teetotaler paying $10 towards the expensive wine on the table next to him. Every pound of increase in weight on an airplane makes it burn more gas hence costs more. The revenue management at airlines will try to make sure that to make the flight profitable, they will keep the total price of tickets charge for all the expected weight.
• Fly Light – Does every person require a large size bag of 10 pairs of clothes? The free bag check-in policy has spoiled us all. Can’t we all fit in 3-4 pairs of clothes in a carry-on bag? Jackets can be worn.
• What about my vacation plan? – I do understand the reasoning for people complaining about the fee while going on vacation, but you are already spending on $$$ on hotels, rental cars, tours, food, etc so overall the $15 per bag is a small expense compared to rest.
• We like to fly – I would rather have all the airlines survive this oil price, then them to go bankrupt, since any bankruptcy means reduction in capacity means even higher air fare prices.

Sorry state of Airlines as compared to BIG oil companies -

• Oil from $60 to $145 a barrel- Oil Companies raised the gas price from $2 to $4.5 (125% increase), Airlines raised the average airfares by 10-35%
• Net Income for the biggest in 1st Quarter 08 – Exxon Mobil: +$11 billion and American Airlines (AMR Corp): -$328 million
• CEO Compensations for the biggest 2007 – Exxon Mobil’s Rex Tillerson: $21.7 million and American Airlines’ Gerard Arpey: $6.6 million
  

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