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UAL/CAL one step closer

contrail67

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CHICAGO (AP) - United Airlines could take its partnership with Continental Airlines deeper by joining up on things such as fuel purchasing and consolidating ticket counters, UAL Corp. Chairman and Chief Executive Glenn Tilton said on Thursday.

A team made up of three top people at both airlines, including the CEOs, has already met three times to explore some cost-saving measures they could both take, he said.

"Whether ground handling, fuel servicing, de-icing, catering, all of that affords an opportunity," Tilton said after a meeting of the CEOs in the 21-member Star Alliance. "Not all of it's going to be realized. But all of that forms the basis of a conversation," he said.

Such measures could end up saving the airlines a significant portion of the money they would have saved if they had merged, he said. The two had serious discussions in the spring but no combination came of it.

Airline teams like the Star Alliance sell seats and allow frequent fliers to earn and redeem miles on each other's flights. In addition, Continental Airlines Inc. and UAL Corp.'s United are also seeking antitrust approval for a trans-Atlantic joint venture that would allow them to share revenue in an arrangement that would also include Lufthansa and Air Canada.

Such arrangements need antitrust approval because airlines that used to compete on price on some routes end up coordinating prices and sharing the money — exactly the sort of thing that antitrust laws are supposed to fight.

Airlines argue that it helps travelers because they get a wider selection of flights and can more easily switch between carriers on long trips that might originate on one airline and end on a different one.

United and Continental would still compete on domestic U.S. service. And Tilton said their discussions about cost-saving measures in the U.S. would stay away from anything close to what he called the "bright line of pricing."

If the U.S. antitrust approval comes through, Continental would leave the SkyTeam alliance and join Star Alliance, probably late in 2009, Star CEO Jaan Albrecht said on Thursday.

Tilton said cost-savings discussions would not start in earnest until then. He said his managers at individual airports are eager to get started. When he asks them whether they could work with the managers at Continental to find cost savings if it was legally permissible, "I have not yet heard one manager say 'No.' All they really want to know is 'When can I talk to them?' "

Such arrangements are legally tricky but can be permissible if they're done right, said Ted Bolema, a former Justice Department antitrust attorney and now a principal at Anderson Economic Group. He said companies can ask the Department of Justice to review such plans beforehand, although the Department is not obligated to provide an opinion.

Star Alliance is getting bigger with or without Continental. On Thursday its member CEOs voted to add Brussels Airlines, a small Belgian airline with 300 daily flights, about one-tenth of United's schedule. In September Lufthansa bought a 45-percent equity stake, with an option for the rest in 2011.
 

cybourg10

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After the failed merger attempt last summer I thought CAL would go at it alone and just wait to pick up and pieces left over if UAL went into liquidation mode (god forbid) but more signs seem to point to a merger. UAL is drastically downsizing everything and as time passes it seems the merger is now more likely to happen than unlikely IMHO.
 

skywdriver

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The thing is, I think it is very possible to realize most of the benefits of the merger without actually having to merge. I know on the surface the Delta/Northwest thing seems to be going quite well, but there are still going to be a huge set of expenses before the true cost savings occur. I think if CAL and UAL can at least milk the alliance enough to make the combined route structure seamless from the passenger point of view, that should be enough for them to compete with the new Delta. I sure as heck hope there is no merger, I will be looking for a new line of work if that is the case.
 

JimmyKool

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If we do merge, UAL pilots will strike and CAL pilots will scap. Just for old times sakes.
 

Jonny Sacko

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If you're talking about scabbing, I don't think there is enough of them around any longer to play too much of a factor. The age 65 bit fat ass prater pushed for, is the greatest boost to the scabs so far. 5 years to steal more. That's almost as big of a travesty as your initial post. Stay away from your dad's keyboard. He'll be pissed later.
 

Yuppyguppy

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The thing is, I think it is very possible to realize most of the benefits of the merger without actually having to merge. I know on the surface the Delta/Northwest thing seems to be going quite well, but there are still going to be a huge set of expenses before the true cost savings occur. I think if CAL and UAL can at least milk the alliance enough to make the combined route structure seamless from the passenger point of view, that should be enough for them to compete with the new Delta. I sure as heck hope there is no merger, I will be looking for a new line of work if that is the case.


START LOOKING
 

skywdriver

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i don't see the incentive from a business point of view to merge if the glorified codeshare brings the routes together. i will start looking when it actually seems likely that a merger will happen. speculation is worth nothing. what does CAL really have to gain from merging with United that they can't gain from a well structured alliance???
 

ACL65PILOT

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I think what CAL is doing is getting so close to UAUA that when they go under, they are so close that no one else can get the leftovers.
 

skywdriver

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for the sake of all the UAL folks, I hope they make it through this mess. I just hope we don't merge with them right now, I don't want to pay the penalty for their need to downsize so much. I think CAL's main goal right now is keeping a competitive route structure that will retain their business flyers. Who knows, knowing when you get into this business that you have no control over so many things never makes it easy to stomach.
 

lookin4better

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I have to admit I am suprised that there have not been more mergers since DAL/NWA.... I thought there was going to be a ' merger mania ' of the legacy carriers to follow DALs and NWs lead.

ACL might be correct... CAL may be just getting near to Uniteds assets if they go under.

Or the companies are going to get all the groundwork of a merger complete first, quietly, without using the M word ( all the things that happen in a merger -- minus the pilots ) and then overnight sneak in a merger, leaving the pilots with very little power to have a voice. Maybe they are just going about a different way to the same end-state ---- merger.

Only one of many senarios possible..

But I am still suprised more mergers have not occured.

But then again, I dont think the incoming Administration / DOJ is going to be anti-merger, so there is still time to do so.

Best of luck to all involved either way
 

ACL65PILOT

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Fact is that a UAUA/CAL merger would not be as clean as a DAL/NWA merger. I would venture to guess that this combination would have to divest of some of the assets in the Northeast. Not many, but enough that it would lead to some job loss.

This also holds true for almost any other sort of combination. DAL/CAL would have been a blood bath for the workers.
Anyone going with AMR will gets some slots taken too. I think that is why you do not see any other mergers currently. Many execs are trying to figure out a way to make one work, please the DOJ, and get the unions on board as DAL/NWA has done.
This merger has been tame. Thus far it has been a fairy book tale for the managers of DAL.
 

lookin4better

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Good points...

That being said I agree with you, I think they ( potential merger players) are trying to make one ' work '.... how that ends up happening, time will tell.

This CAL/UAL ' joint venture ' is interesting to say the least. Something merger-like appears to be in the works.
 

ACL65PILOT

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That it does, and both appear to be shedding pilots. Never good!
 

100/hour/5y

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Please CAL and UAL... We need some Pilots that know what a good contract is....

Last week Cal Had about 20 crews sleep in IAH crew room do to the weather and operations... Get this, they work flights the next day after sleeping in the crew room...

true story!
 

luckytohaveajob

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Last week Cal Had about 20 crews sleep in IAH crew room do to the weather and operations... Get this, they work flights the next day after sleeping in the crew room...

true story!

CAL has worked under substandard conditions for 25 years. Why would it change?

Good thing CAL gets all those industry awards. If you tell them they are great some of them might believe it and are more willing to accept the substandard conditions. Overall, the group has been beat down so much they do not have a will to fight.
 
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Dan Roman

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I think what CAL is doing is getting so close to UAUA that when they go under, they are so close that no one else can get the leftovers.

Dude, do you were your Delta uniform to bed??
All your posts are how wonderful Delta is and how screwed up everyone else is.
I think the DAL/NWA merger was in fact very well executed and will make a very good airline. Just don't forget PanAm was a very good airline in the 60's. So was TWA. Braniff was the most profitable airline of the 1970's. Eastern was the biggest airline at one point in the 1980's.
Anything could happen, the economy could crater and DAL could be too big and UAL/CAL good reorganise and be the dominate airline. We work in an industry that is a crap shoot no matter who you work for.
I hope not everyone at DAL is too cocky cause I bought stock in DAL.
 

luckytohaveajob

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Dude, do you were your Delta uniform to bed??

At least Delta bought him his uniform. Have you got any good deals at JCPenny on your uniform lately? Hows your health insurance. Are you covered or do you just raid the first aid kit every chance you get and call that free health insurance?
 
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luckytohaveajob

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All your posts are how wonderful Delta is and how screwed up everyone else is.

I see you are a 67 captain. How do those 14 hour three days pay? Does CAL give you 14 hours of pay if you fly 14 hours? Or do you do it for 10 hours and sleep in the crew room?
 
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