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UAL/CAL one step closer

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contrail67

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Oct 13, 2003
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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.
 
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.
 
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.
 
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.
 
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
 
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???
 
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.
 
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.
 

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