Continental expanding at DEN?

[bobbysamd]

I read this in the Denver Rocky Mountain News this morning. Hmmm, interesting.........

New hub for DIA?
Continental considers filling void if UAL leaves Denver, sources say

By David Kesmodel, Rocky Mountain News
March 7, 2003

Continental Airlines Inc. is exploring whether to ratchet up service at Denver International Airport - including possibly launching a DIA hub - if United Airlines slashes operations at the fifth-busiest U.S. airport.

In the past two to three months, schedule planners for Houston-based Continental have been studying the potential redeployment of aircraft, the profitability of routes from DIA and possible capacity changes by United, -DIA's dominant carrier, people familiar with the matter said.

If United, operating under bankruptcy- court protection, dropped the airport as a hub, significantly reduced DIA service or went out of business, Continental would look closely at expanding flights, these sources said.

A Continental spokesman, David Messing, said that "as things stand now, we don't expect to expand in Denver."

However, he said, "The industry is in a great state of flux. If industry conditions change dramatically, we'd have to take a close look at new options that present themselves."

He declined to elaborate.

Dan Melfi, a DIA spokesman, said Continental told him it was doing studies. He said other airlines, including AMR Corp.'s beleaguered American Airlines, also are doing analyses and might look at some type of expansion.

Continental's studies add weight to comments made by the carrier's outspoken chief executive, Gordon Bethune, before United's Dec. 9 bankruptcy filing. Bethune told The New York Times that Continental, which once had a Denver hub, might want to expand in Denver to increase its foothold in the West.

Continental, which has its own financial problems, "has plans that think through all the different" actions Chicago-based United might take, one source said. Continental also is analyzing what other airlines at DIA might do if United slashes operations.

Continental would be, by far, the most likely of the major U.S. airlines to start a DIA hub in place of United, analysts said.

Executives at UAL Corp.'s United say they want to keep DIA as a hub as part of their restructuring strategy. However, the company said recently that its board asked executives to explore closing up to three of the carrier's U.S. hubs, including DIA, as a possible alternative.

United, which has a total of five U.S. hubs, had no comment on Continental's planning.

Continental, the world's seventh-largest airline, has U.S. hubs in Houston, Newark, N.J., and Cleveland. It has 13 daily flights from DIA; each goes to one of the hubs.

Continental was Denver's dominant carrier in the 1980s at Stapleton Airport. After the airline's own bankruptcy and fierce competition with United, it drastically reduced its presence in Denver when DIA opened in 1995.

"If United were to go away, Denver would be an obvious candidate for a major hub again" for Continental, said Scott Hamilton, a Seattle-based industry consultant. "Continental could recall some planes parked in the desert, they could shift capacity, or they could close the Cleveland hub, which has always been kind of a marginal hub for them."

He rated Northwest Airlines Corp. "a distant second" to Continental as a DIA hub candidate and called Southwest Airlines Co. "a way-distant third."

Eagan, Minn.-based Northwest is "very much married" to hubs in Minneapolis and Detroit and could take advantage of Continental starting a Denver hub through its code-sharing alliance with Continental, said Bill Swelbar, managing director at ECLAT Consulting Inc.

Northwest declined comment.

Dallas-based Southwest has long cited high airport costs as a deterrent to serving DIA. The discounter also tends to enter airports with a bigger "catchment area," the population area for which the airport is the closest and most convenient airport, Swelbar said.

Southwest did not respond to a request for comment.

Melfi said Delta Air Lines Inc. and American are among carriers doing studies of adding capacity at DIA if United slashes operations. Delta spokeswoman Peggy Estes, however, said the Atlanta-based carrier is not studying Denver and is focused on its Western hub in Salt Lake City. Fort Worth, Texas- based American declined comment.

"If United liquidates, some (airlines), if not several, are going to have an interest here. Continental is a real possibility," said Elise Eberwein, spokeswoman for Denver-based Frontier Airlines Inc., which serves 12 percent of DIA passengers.

"We'd be interested in growing our presence as well," she said, but added that discounter Frontier would not have the size or wherewithal to stop a large rival from moving in.

Continental, like other major U.S. carriers, has struggled since the U.S. recession and the Sept. 11, 2001, attacks. But its losses have not been as great as larger rivals United, AMR and Delta.

Continental posted net losses of $95 million in 2001 and $451 million in 2002. It had $1.34 billion in cash and cash equivalents on Dec. 31.

"Certainly, their balance sheet is very fragile," Swelbar said. "They will be thinking through (any Denver expansion) very carefully."

Continental was among airlines lobbying the federal Air Transportation Stabilization Board last year to deny United's request for a $1.8 billion loan guarantee. The board denied the guarantee Dec. 4, and United filed for Chapter 11 five days later.

(emphasis added)

It would be nice if Continental steps up to the plate, especially because it had input into the design of Denver International Airport. United had more input, but it appears United might being bailing.

 

[Floyd94]

Considering they have all their MD80's in the desert on "standby", I'm bettin' they'll use this hub for both mainline and express.

 

[Boeingman]

Also, if it is a mainline hub... maybe CAL should consider a Frontier buyout.

It would never happen. Lot of rumors, some from very reliable sources about DEN.

 

[mckpickle]

Also, if it is a mainline hub... maybe CAL should consider a Frontier buyout.

Great idea, got a buck we can borrow. Personally I think we should have bought out Alaska. America West was an option but they had/have too many internal problems to inherit.. JMHO

 

[delivery100]

I know everyone is salivating over DIA, but the last time I checked, United was still flying and is in no immediate danger of liquidating.

The last I heard was that UAL obtained signifigant financing and is considering expanding into Houston just in case CAL liquidates. Just a rumor though.

 

[Boeingman]

I know everyone is salivating over DIA, but the last time I checked, United was still flying and is in no immediate danger of liquidating.

The last I heard was that UAL obtained signifigant financing and is considering expanding into Houston just in case CAL liquidates. Just a rumor though.

No immediate danger of liquidating? OK. Best of luck, you're really going to need it.

P.S. I hope CAL tells the city of Denver to pound sand and eat those bonds for financing DIA.

 

[delivery100]

Boeingman,


If you have actually read the papers and know the facts, UAL is doing significantly better that the covenants outlined by their DIP financing.

My point is that there are many who are praying to see the demise of UAL including CALs C*CK sucking CEO, who was on the forefront of the campaign trying to stop UAL from obtaining a loan they should have received. After all, it was 2 of United's aircraft that were used as weapons of mass destruction. But no, the government should not have co-signed for a loan to stabilize one of the airlines that was DIRECTLY affected by osama bin laden. Uh huh, right.

While the possibility of a CH 7 for UAL is sigificant, the fat lady has not sung yet, so I wouldnt plan any immediate moves to the Denver area.

 

[Boeingman]

Boeingman,


If you have actually read the papers and know the facts, UAL is doing significantly better that the covenants outlined by their DIP financing.

I don't bother reading the papers for financial information. with the amount of money I have tied up in the markets I stick to the newswires. I'd be willing to bet my contacts with the finacial industry go far and above the crew room gossip you're relying on about UAL. In fact, just by your posts your niavity on the situation is, well, breathtaking. But that doesn''t seem surprising. That attitude over there seems pandemic, which is a big part of the problem.

UAL is in serious trouble with their DIP financing. The first gate, although met, was the easiest. With the $382 million dollar loss for Jan. it has put the company far behind the next gates. Let's not forget those losses do not include the fact UAL is making zero aircraft lease payments and zero pre petition c11 debt obligations.

But, if things are going so well why did State Street Bank move to liquidate the outstanding shares being held? Why did UAL sell 5 744's to Thai at fire sale prices? If I had the time, I'd post a few blistering articles based on factual financial data that shows UAL is imploding financially.

My point is that there are many who are praying to see the demise of UAL including CALs C*CK sucking CEO, who was on the forefront of the campaign trying to stop UAL from obtaining a loan they should have received.

As a taxpayer I'm glad Bethune was saying what everyone wanted too, but no one had the balls to say. UAL did not deserve the loan based on the financial condition of the company. They misrepresented to the ATSB their true financial picture by about 15 million a day, they had no credible business plan to emerge from bankruptcy and they could not prove to the Government they could pay the money back. Sorry, but that is just business. You think Bethune's comments changed the true financial picture of UAL? It is about the ability to repay not what someone thinks they should get or thinks they deserve. Bethune was right, your management is still clueless and there is no viable plan. Oh I forgot, the LCC thing. That sir is a joke.

After all, it was 2 of United's aircraft that were used as weapons of mass destruction. But no, the government should not have co-signed for a loan to stabilize one of the airlines that was DIRECTLY affected by osama bin laden. Uh huh, right.

You're forgetting the Government did give UAL (and others) cash to stabilize. What happened to UAL was a terrible act of cowardice. What is disgusting is your contention that because of that, you feel you're more deserving than others and to hell with everything and everybody else.

the possibility of a CH 7 for UAL is sigificant, the fat lady has not sung yet, so I wouldnt plan any immediate moves to the Denver area.

I could care less about Denver. I also really don't care what happens one way or another to UAL. I feel for the people there, but I can vividly remember the absolute harrassment UAL employees showed towards CAL during our last BK in Denver. (I was walking a picket line for the first one).

 

[mckpickle]

Boeingman,



My point is that there are many who are praying to see the demise of UAL including CALs C*CK sucking CEO, who was on the forefront of the campaign trying to stop UAL from obtaining a loan they should have received.

UM ya thats why United was trying to Woo Bethune to be their CEO for the last how many years? His response, "why go from a winner to a loser"

 

[RichardFitzwell]

Will the employees of United be able to use the Texas Pacific Group for financing and to oust Tilton now that they no longer have a controlling interest? If so, could that be the reason their ESOP was sold off so quickly?

 

[delivery100]

I'd be willing to bet my contacts with the finacial industry go far and above the crew room gossip you're relying on about UAL. In fact, just by your posts your niavity on the situation is, well, breathtaking. But that doesn''t seem surprising. That attitude over there seems pandemic, which is a big part of the problem.

Well, your assumptions are wrong once again. I do not work for UAL and also do not rely on "gossip" in any crew rooms. My niavety (spelled correctly on my post) on the situation is breathtaking? Please, I am acknowledging the precarious situation UAL is facing.

UAL is in serious trouble with their DIP financing. The first gate, although met, was the easiest. With the $382 million dollar loss for Jan. it has put the company far behind the next gates. Let's not forget those losses do not include the fact UAL is making zero aircraft lease payments and zero pre petition c11 debt obligations.

But, if things are going so well why did State Street Bank move to liquidate the outstanding shares being held? Why did UAL sell 5 744's to Thai at fire sale prices? If I had the time, I'd post a few blistering articles based on factual financial data that shows UAL is imploding financially.

As with any DIP covenants, the gates or bench marks always become more and more strict until the company returns to profitability. UAL has EASILY passed the first test, and is continuing to trim costs to meet the next bench mark. If improving from a 20 mil/ month to a 12 mil/month loss in 2 months was a signal that future benchmarks would definitely not initially enough, Why wouldn't they pull the plug today?
As far as selling the 747's, they were parked in the desert for over a year. And the selling of the remaining stock? Please...even if UAL successfully reorganizes, the stock will still be worthless. I'd like to know who is buying it.

As a taxpayer I'm glad Bethune was saying what everyone wanted too, but no one had the balls to say. UAL did not deserve the loan based on the financial condition of the company. They misrepresented to the ATSB their true financial picture by about 15 million a day, they had no credible business plan to emerge from bankruptcy and they could not prove to the Government they could pay the money back. Sorry, but that is just business. You think Bethune's comments changed the true financial picture of UAL? It is about the ability to repay not what someone thinks they should get or thinks they deserve. Bethune was right, your management is still clueless and there is no viable plan. Oh I forgot, the LCC thing. That sir is a joke.

Bethune was saying what everyone wanted too. Well, again sir, you are misinformed. Speak for yourself and the people you talk to. Don't for a second think your spineless CEO was speaking for everyone.

Yes, Uniteds financial situation was suffering pre 9-11, but I have not read or heard one opinion that suggests that UAL would be where it currently is at this time without the attacks on the US as well as UA and AA. So, should the GOV provide their signature on a loan for UAL? You G d*mn right they should have. Whether UAL would have been ultimately doomed or not, it WAS the right thing to do. If the US can try to bribe Turkey with tens of billions of dollars to allow our troops on their ground, they can surely co-sign for a loan for a company that was DIRECTLY attacked on that fateful day in September.

I guess Deltas LCC is a joke as well, and AMR for considering the idea as well.

You're forgetting the Government did give UAL (and others) cash to stabilize. What happened to UAL was a terrible act of cowardice. What is disgusting is your contention that because of that, you feel you're more deserving than others and to hell with everything and everybody else.

The industry as a whole deserved the opportunity for financial aid. But do I think that UAL and AMR deserved more opportunity because THEIR aircraft were used as missiles? ABSOLUTELY! Are you so naive that you dont think brand recognition meant anything? When the entire world saw United and American 767's flying into buildings? You dont think that affected travel demand MORE on those carriers?

I feel for the people there, but I can vividly remember the absolute harrassment UAL employees showed towards CAL during our last BK in Denver. (I was walking a picket line for the first one).

The only harassment UAL employees gave CAL employees was to the very large group of scabs that CAL once had. Did you not walk the picket line for the last one?

 

[Boeingman]

It really is quite simple....for some

Well, your assumptions are wrong once again. I do not work for UAL and also do not rely on "gossip" in any crew rooms. My niavety (spelled correctly on my post) on the situation is breathtaking? Please, I am acknowledging the precarious situation UAL is facing.

Well pardon my spelling. Ever cross your mind that it may be a typo? Of course, when one runs on a thin argument they must grasp at every fiber they can to bolster a weak position. Incidently, check your own spelling hotshot.

http://dictionary.reference.com/search?q=naive&r=2

For someone who doesn't work for UAL you sure have a hardon about the situation over there reference the loans, Bethune, Continental etc. etc.

As with any DIP covenants, the gates or bench marks always become more and more strict until the company returns to profitability. UAL has EASILY passed the first test, and is continuing to trim costs to meet the next bench mark. If improving from a 20 mil/ month to a 12 mil/month loss in 2 months was a signal that future benchmarks would definitely not initially enough, Why wouldn't they pull the plug today?

As far as selling the 747's, they were parked in the desert for over a year. And the selling of the remaining stock? Please...even if UAL successfully reorganizes, the stock will still be worthless. I'd like to know who is buying it.

False about typical bankruptcy DIP covenants. UAL was such a high risk the lenders did this to insure they would have a plan to get repaid or have the ability to liquidate their assets quick. Your characterization of easily passing the first gate may not be accurate either with the recent financial results released last week.

So you believe that the only problem is on the cost side of the equation? Sure, keep thinking that. You don't think they have a slight revenue problem over there? Last report I read is that UAL employees would have to work for 138% less than they are now to break even.

The only improvement on their recent financials was due to the protection of the bankruptcy court. I think it is interesting you fail to acknowledge the fact they are not paying a nickel, no make that a penny, on any pre petition debt or aircraft leases. And by the way, the losses are around 12 million a day, not a month. It is real easy to figure that out just divide $382 million by 31 days for Jan and you'll get the correct figure. Now I know it can't be a typo since you repeated it twice.

Parked for a year? And that means what? It means they were failing over a year ago? Does it mean their business plan could not support the aircraft (hint hint)? Does it mean they dumped them at a fire sale price because they need cash? I'll go with all of those answers. They are burning the furniture to heat the house. Hardly a situation that looks like it is showing improvement

Bethune was saying what everyone wanted too. Well, again sir, you are misinformed. Speak for yourself and the people you talk to. Don't for a second think your spineless CEO was speaking for everyone

Spineless? Hardly. Those who don't like the message always attack the messenger. Just like you're doing to me. What is interesting is there are a lot more people (bankers, analysts, creditors etc. etc) who agree with Bethune about the terminal condition of UAL than those who don't. If you'd just stop reading the comics, open your eyes and really listen you'd stop attacking our CEO and concentrate on the real internal problems at United. But whatever your tie is with them, your attitude is atypical of the problem there. They (management included) still are in denial about the true condition of the company and would rather point fingers at others than fix the problems.

Yes, Uniteds financial situation was suffering pre 9-11, but I have not read or heard one opinion that suggests that UAL would be where it currently is at this time without the attacks on the US as well as UA and AA. So, should the GOV provide their signature on a loan for UAL? You G d*mn right they should have. Whether UAL would have been ultimately doomed or not, it WAS the right thing to do. If the US can try to bribe Turkey with tens of billions of dollars to allow our troops on their ground, they can surely co-sign for a loan for a company that was DIRECTLY attacked on that fateful day in September.

I call Bull$hit to the entire paragraph. This is business not a morality contest. Politics aside, I don't want my tax dollars proping up a dead company. Comprende?

I guess Deltas LCC is a joke as well, and AMR for considering the idea as well.

Let's answer it this way. How successful was the old UAL Shuttle? How much support does this LCC have with the intransigent UAL unions? Shall I continue?

The industry as a whole deserved the opportunity for financial aid. But do I think that UAL and AMR deserved more opportunity because THEIR aircraft were used as missiles? ABSOLUTELY! Are you so naive that you dont think brand recognition meant anything? When the entire world saw United and American 767's flying into buildings? You dont think that affected travel demand MORE on those carriers?

AMR did not ask for a loan. Do you really believe they were only on AA and UAL aircraft? You don't get loans based on what you think you deserve in business. It is based on the ability to repay. I noticed you are now furloughed. Why don't you try this tactic and logic on your local bank for your debts. Use the same arguments and tell them how much you deserve not to pay your debts because of your exposure to...United Express is it? It seems that is the only analogy I can come up with to show you emotions doesn't make a bit of difference in the business world.

How about another example? My outside business has expanded to the point where we need an aircraft because economically it is getting expensive to charter airplanes. I think I deserve a Gulfstream. Actually a BBJ, but for my business I am forced to buy an old Citation II. Why? Because the banks, pouring over my financials say they are only going to lend me x amount of dollars. Hence, it is the only aircraft in the price range that I have the ability to repay. They are not going to loan me the money for something they feel I might default on. Really, the issue is the same with United just different players. Of course I could jump up and down and point fingers and whine I deserved it, but I would walk with empty pockets just the same.

The entire industry took a hit on 9/11. To be base your argument for more money for some just on the terrorist action is really low. Besides, how can you say with certainty it was a drop because of avoidance of a specific carrier or just a plan lousy business plan? Perhaps the same plan that kept those shiny 747's in the desert for over a year?

The only harassment UAL employees gave CAL employees was to the very large group of scabs that CAL once had. Did you not walk the picket line for the last one?

Now that is truly an ignorant comment. There are no picket lines during a bankruptcy, only a strike. The only combination strike/bankruptcy was 83 which I carried a sign for 25 months. So how could I walk a picket line for the 90's bankruptcy (last one)? Answers please.

Also, UAL employees were openly hostile to all CAL employees. I vividly remember the torque buttons, harrassment of our passengers in the terminals open anger towards people they didn't even know who they were talking to. i.e. myself, a full term striking pilot. I don't buy your line about selective antagonizing of just scabs. UAL folks were unbiased in their attitudes towards all CAL employees.

Just how much time did you spend on the CAL property in the 90's to give us this view of UAL towards CAL?
Now that the shoe is on the other foot I would really enjoy talking with some of those same people. Or the ones who engineered the reaming of Frontier in 86. That hit in my family as well. Do you remember what United did to them?