United and Continental Talking....

[pkober]

United:
A319
A320
B737
B747
B757
B767
B777


Continental:
B737
B757
B777

CAL
B767
B787 (2008?)

 

[LJDRVR]

No CAL/UAL deal would happen without Kellner & Smisek firmly in charge. NWA would veto any merger, so the only way this deal could happen is for us to buy United. I certainly hope this doesn't go down for several reasons, my postion as a Continental Pilot being the big one.

First off, it would be a bloodbath for the United employees. They've suffered enough already, they deserve a chance to rebuild themselves as a strong, independent entity after the sacrifices they've made.

Secondly, we don't need it. CAL is stronger than any other major out there right now, and should remain so for at least a decade. While the addition of west coast network would certainly help our business travelers, we're doing fine as it is. We will continue to grow on our own. The only reason for us to purchase a carrier would be to compete with other mega-carriers, and it really doesn't look like this USA/DAL thing is going to happen.

 

[acbarney]

Can someone tell me what the deal is with NWA's power to void and CAL merger?

There are some who claim to know "for sure" that NWA can block any activtiy.

There are some who claim to know "for sure" that CAL can buy whoever they want.

I've read the SEC papers and I can't figure it out, I'm no lawyer.

All that being said I'm "sure" there will be a way ($$$) around any "complications"

 

[densoo]

CAL
B767
B787 (2008?)

Ya! ;;;;;;;

 

[EWR_FO]

Can someone tell me what the deal is with NWA's power to void and CAL merger?

Good luck trying to figure out what it means.

The following is taken from NWAC 8k filed with the SEC on 11/15/2000.
FORM 8-K November 15, 2000 NORTHWEST AIRLINES CORPORATION Preferred Stock. In connection with the amendment to the Alliance Agreement, Continental will issue Northwest one share of a new series of preferred stock (the "Preferred Stock") for a nominal price. The Preferred Stock will give Northwest the right to block, during the term of the Alliance Agreement or, if earlier, until the Preferred Stock becomes redeemable, (i) certain business combinations and similar change of control transactions involving Continental and a third party major air carrier with respect to which the stockholders of Continental are entitled to vote, (ii) certain amendments to Continental's rights plan (or certain redemptions of rights

-2-
thereunder), (iii) any dividend or distribution of all or substantially all of Continental's airline assets, and (iv) certain reorganizations and restructuring transactions involving Continental.

The Preferred Stock will be redeemable by Continental at a nominal price (and the blocking rights eliminated)
***(i) if Northwest transfers or encumbers the Preferred Stock,
***(ii) if there is a change of control of Northwest as defined in the Preferred Stock, unless previously consented to by Continental,
***(iii) on expiration or termination of the Northwest Alliance (other than as a result of a breach by Continental), or
***(iv) if Northwest materially breaches its standstill obligations (referred to below) to Continental or triggers Continental's rights agreement.

Change of Control. Under the terms of the Preferred Stock, a change of control of Continental or Northwest means, among other things, (i) a merger, reorganization, share exchange, consolidation, tender or exchange offer, private purchase, business combination, recapitalization or similar transaction with a third party major air carrier, the acquisition by a third party major air carrier of 25% or more of the relevant carrier's capital stock or voting power, or the acquisition by the relevant carrier of 25% or more of the capital stock or voting power of a third party major air carrier,
(ii) the liquidation or dissolution of Continental or Northwest, (iii) the sale, transfer or other disposition of all or substantially all of the relevant carrier's airline assets to a third party major air carrier, whether in a single transaction or series of transactions, (iv) the sale, transfer or other disposition of all or substantially all of Continental's transatlantic or Latin American route network, or Northwest's transpacific route network,
(v) the acquisition by a third party major air carrier of 25% or more of the capital stock or voting power of the relevant carrier, (vi) the acquisition by the relevant carrier of airline assets and associated employees, which airline assets would have on a pro forma basis annual passenger revenues of more than $1 billion, or (vii) the execution by the relevant carrier of bona fide definitive agreements with respect to any of the foregoing. The Preferred Stock also provides that commercial cooperation agreements, which consist of certain code sharing agreements, joint ventures or similar arrangements, will not constitute a change of control of the relevant carrier under certain circumstances.
http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0000893750%2D00%2D0005 52%2Etxt&FilePath=%5C2000%5C12%5C01%5C15%5C&CoName =NORTHWEST+AIRLINES+CORP&FormType=8%2DK&RcvdDate=1 2%2F1%2F2000&pdf=

 

[Flopgut]

No CAL/UAL deal would happen without Kellner & Smisek firmly in charge. NWA would veto any merger, so the only way this deal could happen is for us to buy United. I certainly hope this doesn't go down for several reasons, my postion as a Continental Pilot being the big one.

First off, it would be a bloodbath for the United employees. They've suffered enough already, they deserve a chance to rebuild themselves as a strong, independent entity after the sacrifices they've made.

Secondly, we don't need it. CAL is stronger than any other major out there right now, and should remain so for at least a decade. While the addition of west coast network would certainly help our business travelers, we're doing fine as it is. We will continue to grow on our own. The only reason for us to purchase a carrier would be to compete with other mega-carriers, and it really doesn't look like this USA/DAL thing is going to happen.

Easy there partner! Only listen to the folks in the trng bldg if they are talking about the curriculum, if they are talking about anything else, don't!

 

[Andy]

Can someone tell me what the deal is with NWA's power to void and CAL merger?

In a nutshell:
Until ~2025, NWA has the right to block any carrier's acquisition of CAL unless NWA merges with another carrier.
NWA cannot block CAL from taking over another carrier.
So it is possible for CAL to acquire United, just not the other way around.

If United were to merge with another carrier, I'd pick CAL because there is minimal overlap. Overlap results in reductions of block hours and jobs. I wouldn't mind seeing CAL take over United and at this point, I wouldn't object to a merge of lists favoring CAL pilots. I consider DOH a nonstarter because it would REALLY screw over the CAL pilots.
Just make sure that CAL management is in charge and UAL management slinks off into the sunset. UAL management got us through a rough period in our history but they can't lead their way out of a paper bag.

United would likely be the surviving name.

 

[stillflyn]

In a nutshell:
Until ~2025, NWA has the right to block any carrier's acquisition of CAL unless NWA merges with another carrier.
NWA cannot block CAL from taking over another carrier.
So it is possible for CAL to acquire United, just not the other way around.

If United were to merge with another carrier, I'd pick CAL because there is minimal overlap. Overlap results in reductions of block hours and jobs. I wouldn't mind seeing CAL take over United and at this point, I wouldn't object to a merge of lists favoring CAL pilots. I consider DOH a nonstarter because it would REALLY screw over the CAL pilots.
Just make sure that CAL management is in charge and UAL management slinks off into the sunset. UAL management got us through a rough period in our history but they can't lead their way out of a paper bag.

United would likely be the surviving name.

You must be joking!

 

[Andy]

You must be joking!

I'm at the bottom of UAL's freakin' seniority list. I expect to be at the bottom of the combined seniority list. NO WAY do I think that DOH is appropriate.
UAL has an average retirement rate of 4%/yr, it looks like CAL is running closer to 7%/yr over the next ten years.
And no worries, I'd never be on the merger committee. Just hope that UALALPA doesn't use the same people who negotiated C2003.

 

[acbarney]

I would bet big money on this conversation....

Tilton: Hi Larry I have a proposition for ya.

Larry: Oh Yeah?

Tilton: Either merge with us, or we will put an offer in on DAL and leave you guys with NWA.

Larry: Uuuuuhhhhhh.

Tilton: Think about it and get back to me. *click

 

[D-Bo]

dangit - am I gonna get furloughed again?

Is this R.W. in DEN? If so, what's up? I wouldn't worry too much about being furloughed. A few reasons why I wouldn't if UAL and CAL merge are:

1) UAL is still short on pilots. The recall classes that are planned through FEB07 weren't created for future retirements. They were created because UAL is short now. The recall classes would have been more frequent or in larger numbers this year if TK could have handle it mapower and resource wise. At worst, I see recalls slowing down or stopped for a while but I wouldn't anticipate any furloughs.

2) If it is CAL, they are short also and hiring like crazy. They also have a bunch of new aircraft coming next year. I don't think all of the hiring they are doing right now is in anticipation of the upcomming retirements. Some of them maybe. But not most. I think most of the hiring they're doing is being done because they need those new bodies NOW.

3) A lot of folks are anxious about being urloughed again but I can't think of a merger that resulted in furloughs after the fact. I'm sure there may be one or two cases but I can't think of any right now. Heck, even after AMR bought TWA, that didn't result in any furloughs. That didn't happen until after 9/11. After AMR bought TWA, they were STILL hiring about 30 pilots a week and there was some overlap. Even though there was a lot less overlap, no furloghs have happened since Airways and America West became one. Yes, AmWest stopped hiring, but they didn't furlough. And Airways furloughees are still coming back.

So I'm not saying it could happen, anything can happen. But, I wouldn't be overly concerned about it right now. Thye haven't even announced anything yet. We're so far away from when an integration would come. By that time, UAL could possibly be all the way back up the list again. There are more than a couple other factors that would get us re-furloughed before a merger will.


D-Bo aka A.F. from your new-hire class in 3/2000 if this is R.W. I'm talking to.

 

[UALfurloughee]

Yeah - it's me. That all makes sense. Thanks for all the info on retirements too!

Andy, how far down are you? I need to get some info on how to garner all th data you get!

Thanks,
Randy

 

[737 Pylt]

re: UAL/CAL

The size of this carrier would be tremendous. Imagine over 100 777's and 50 747's! Wow! This announced merger makes a lot of sense seeing what UAL has done in recent months ala basically giving up on the NYC market, by discintuining JFK-LHR, JFK-NRT.
I personally wouldn't mind seeing this go through and DL merging with NWA. NWA makes a much better fit for DL, with their pacific routes and our european routes. Hardly any domestic overlap. US Air brings nothing to the table for DL.
As for UAL/CAL, you have to wonder which management team would run this mega airline and where the new HQ would be??
Lots of interesting times ahead!

737

 

[KozzyCFI]

What if it were a merger of equals between UAL/CAL with United offering NWA the A319/320s (which they could use to help replace the aging DC9 fleet) in exchange for not utilizing the "golden share" to block the proposed marriage?? Then the only fleet differences become the 747. And different engines aren't a big deal. Look at AA/TWA 757s running around with RR and P&W engines. And if we CAL guys are already smart enough to bounce between RR 757 and GE 767, well, I'm just guessing, but I bet we could do just fine with Pratts, too.

 

[densoo]

I wouldn't object to a merge of lists favoring CAL pilots. I consider DOH a nonstarter because it would REALLY screw over the CAL pilots.

This will be interesting. CAL has captains right now with DOH junior to UAL pilots still on furlough. So a furloughed UAL pilot gets to come back from furlough to captain? If you're UAL ALPA, yes. If you're CAL ALPA, well, can they fight the inevitable renewal of the "torque" campaign of the early 90s?

 

[fellows]

Anybody heard anything about Cal wanting to sell Air Mic.

 

[D-Bo]

What if it were a merger of equals between UAL/CAL with United offering NWA the A319/320s (which they could use to help replace the aging DC9 fleet) in exchange for not utilizing the "golden share" to block the proposed marriage?? Then the only fleet differences become the 747. And different engines aren't a big deal. Look at AA/TWA 757s running around with RR and P&W engines. And if we CAL guys are already smart enough to bounce between RR 757 and GE 767, well, I'm just guessing, but I bet we could do just fine with Pratts, too.

Just give NWA 155 Airbuses huh?

 

[D-Bo]

Yeah - it's me. That all makes sense. Thanks for all the info on retirements too!

Andy, how far down are you? I need to get some info on how to garner all th data you get!

Thanks,
Randy

I gotta send you an E-Note dude. Haven't talked to you since 15 JAN 03. Hope everytjing is good. Don't worry too much about all this. But do get on the phone with the reps and try to get to those council meetings.

TF

 

[jetexas]

Looks to me that CAL/UAL are both just setting up for dancing partners in case a merging frenzy really does begin. The CO CEO has said he doesn't want to merge but would rather see the company prosper, with 5-7% growth/year, from within. However, if push comes to shove CO will not be left behind if other large mergers do happen.
It sure could pour cold water on the career expectations of those at CO, at least the new guys.

 

[Andy]

This will be interesting. CAL has captains right now with DOH junior to UAL pilots still on furlough. So a furloughed UAL pilot gets to come back from furlough to captain? If you're UAL ALPA, yes. If you're CAL ALPA, well, can they fight the inevitable renewal of the "torque" campaign of the early 90s?

I find that hard to believe unless you are counting the bypasses. UAL is recalling down to the bottom of the pile; '01 hires are now being offered recall.

UAL got upset when USAir proposed DOH; I would expect CAL to get upset if UAL proposes DOH. And I wouldn't blame them.
Both companies are 'relatively' healthy as standalone airlines; I don't give an edge to one over the other in that respect.
Career expectations, however, are brighter at CAL due to the high percentage of retirements over the next few years.

 

[Andy]

Andy, how far down are you? I need to get some info on how to garner all th data you get!

I'm #8004, 6/18/00. Currently have 651 below me. The number will probably be less than 400 after they go through the list the second time.

I get the info from multiple sites, plus google, etc. I'm addicted to the airline industry.
When I racked and stacked airlines back in '99, Northwest, Delta, and Continental were at the top of my list due to upcoming retirements. Since then, Delta's senior pilots have bailed to save whatever was left of their pensions. While United has decent retirement numbers, Continental has a much larger percentage of their pilots hitting retirement within the next 10 years. Northwest still has a decent percentage of pilots retiring over the next 10 years. Depending on how many United pilots who have bypassed opt to return, I could see my seniority number jump by up to 1000 spots (I'd expect to move up ~600 places) on the next seniority list - but that's a one time shot.
You'll see a lot of people saying that growth is more important for advancement than retirements. That depends on the maturity of the company. A mature legacy will have low growth rates (1-2%/yr) compared to retirement rates. Southwest has been experiencing a robust growth rate, much like United did during the 90s, but I anticipate them to hit a brick wall with growth eventually. You already see JetBlue hitting a brick wall. AirTran is currently taking advantage of the retreats by Delta and USAirways, but that also won't last forever. Shortly, I expect to see the newly minted Virgin America pilots say that advancement occurs from growth rather than retirements.

 

[catIIIc]

Andy,
On the last bid a FEB 01 hire is holding captain in EWR. UAL and CAL both bring alot to the table so hopefully the integration will be civil but we are own worst enemies. Hope this doesn't happen though.

 

[Occam's Razor]

In a nutshell:
Until ~2025, NWA has the right to block any carrier's acquisition of CAL unless NWA merges with another carrier.
NWA cannot block CAL from taking over another carrier.
So it is possible for CAL to acquire United, just not the other way around.

You are 100% correct...but only as long as no one receives anything from the deal (a "dividend" or share of the new company). In other words, if there is any form of equity exchange in the deal, it is prohibited by the Agreement.

The SEC doc cited is one of several. The first was dated March, 1998, and the latest was July of 2004.

I sat with 16 other skeptics when the details of the Agreement were presented to us for ratification (a condition required to complete the deal). Each of us questioned the weasely NWA lawyers about the "exactlies" and possible scenarios that could conceivably get around the language. We also questioned the ALPA-provided lawyers (just as pointy-headed as the NWA lawyers, but the tips of their pointy heads weren't dipped in poison...), about the possibility the language could be circumvented.

In the end, the next round of consolidation will be driven and executed by amoral financial geniuses who will rank "best fit" details well below their #1 priority: "How much loot am I gonna get out of this?"; and their #2 priority: "How soon do I get it?"

Any restrictions can be overcome by investors willing to pay the price.

More Tums?

 

[Flopgut]

I find that hard to believe unless you are counting the bypasses. UAL is recalling down to the bottom of the pile; '01 hires are now being offered recall.

UAL got upset when USAir proposed DOH; I would expect CAL to get upset if UAL proposes DOH. And I wouldn't blame them.
Both companies are 'relatively' healthy as standalone airlines; I don't give an edge to one over the other in that respect.
Career expectations, however, are brighter at CAL due to the high percentage of retirements over the next few years.

I think CAL would accept a very close version of DOH, I think it's fair. Merge lists immediately with no furlough clause, put hiring on hold. Bring back UAL furloughs and allow them to then bid their seniority until hiring becomes necessary. CAL's list is not in DOH order due to mergers, this would have to be resolved.

 

[munson]

Andy,
On the last bid a FEB 01 is holding captain in EWR. UAL and CAL both bring alot to the table so hopefully the integration will be civil but we are own worst enemies. Hope this doesn't happen though.

I hope your right, but I think its inevitable. Andy, great attitude about this. I dont want to see anyone get hurt, but some people are. Thats the nature of business. And people are going to fight tooth and nail for every little scrap. Thats my fear with this deal. It could turn into a VERY bitter place to work. United has for the most part just stayed United. CAL on the other hand is a mix of all different backgrounds.

 

[Flopgut]

You are 100% correct...but only as long as no one receives anything from the deal (a "dividend" or share of the new company). In other words, if there is any form of equity exchange in the deal, it is prohibited by the Agreement.

The SEC doc cited is one of several. The first was dated March, 1998, and the latest was July of 2004.

I sat with 16 other skeptics when the details of the Agreement were presented to us for ratification (a condition required to complete the deal). Each of us questioned the weasely NWA lawyers about the "exactlies" and possible scenarios that could conceivably get around the language. We also questioned the ALPA-provided lawyers (just as pointy-headed as the NWA lawyers, but the tips of their pointy heads weren't dipped in poison...), about the possibility the language could be circumvented.

In the end, the next round of consolidation will be driven and executed by amoral financial geniuses who will rank "best fit" details well below their #1 priority: "How much loot am I gonna get out of this?"; and their #2 priority: "How soon do I get it?"

Any restrictions can be overcome by investors willing to pay the price.

More Tums?

Occam, you've got a tough nut there for sure. You might be better off finding a way to get yourselves included in a deal with it, rather than just use it to block a deal. If DOJ will approve a UAL/CAL merger, NWA is probably going to get a financial offer to approve the deal that they can't refuse. Those gypsies will take the money sooner than NWAALPA would like, for sure! That puts CAL with UAL, and DAL with USAir, leaving NWA squarely in AA sights! YIKES! You'd normally be too big for DOJ to approve a deal with AA, but in BK? They might ease up, call it another "rescue mission". TWA wasn't even in BK when that deal went down and look what happened. Let NWA mgt know you want to use that golden share to get yourselves included in the CAL/UAL merger. We'll tell DOJ that's the only way you'll sign off on it, we'll agree to sell AA?......Uhhhh......CLE!

 

[Occam's Razor]

Those gypsies will take the money sooner than NWAALPA would like, for sure! That puts CAL with UAL, and DAL with USAir, leaving NWA squarely in AA sights! YIKES!

I'll take Paul Lynde to block, Peter!

(shudder!)

 

[Andy]

Andy,
On the last bid a FEB 01 hire is holding captain in EWR. UAL and CAL both bring alot to the table so hopefully the integration will be civil but we are own worst enemies. Hope this doesn't happen though.

Holy shnikes! I had no idea that things were moving along that quickly at Continental. Yeah, I can see why you'd be nervous about an integration of seniority lists.

As far as it being civil, unfortunately, it ain't gonna happen. My first job after the Air Force was at Ryan International. Our sims were at NWA. On my first day at NWA's sim facility, over lunch, I had a complete briefing on the NWA/Republic merger that occurred in 1986 how one side screwed the other side - this was 1999.

 

[D-Bo]

I wouldn't object to a merge of lists favoring CAL pilots. I consider DOH a nonstarter because it would REALLY screw over the CAL pilots.

I know you were'nt speaking for all of us but I have to point it out again.......that you're not speaking for all of us.

 

[acbarney]

Holy shnikes! I had no idea that things were moving along that quickly at Continental. Yeah, I can see why you'd be nervous about an integration of seniority lists.

As far as it being civil, unfortunately, it ain't gonna happen. My first job after the Air Force was at Ryan International. Our sims were at NWA. On my first day at NWA's sim facility, over lunch, I had a complete briefing on the NWA/Republic merger that occurred in 1986 how one side screwed the other side - this was 1999.

On the bid in Jan, I would expect April 05 Hires to hold EWR 73 Capt. However with all the merger talk it may not happen due to super senior FO's, who have been bypassing Capt upgrade, finally taking the plunge.