Airline Consolidations and Rumors of Consolidations

For those who fly occasionally the news of airline consolidations can be a blip on their radar or it could be something amusing to know, about the latest airline giving up its independence for cost control.

Then there are those of us who fly often or those who fly frequently who need to know what is going on with the different airline intermingling or just rumors of combinations. Because it affects how we get to our destinations.

For instance, Delta's acquisition of North West gave me less choices that helped me to avoid Atlanta's Hart's Field Airport, since I flew with both airlines. Delta flies everything through Atlanta. At least North West gave me the choice of Detroit or Memphis for international flights and Detroit or Minneapolis for domestic flights, so I could
avoid Detroit at least part of the time.

As for the latest amalgamations going on in the world of commercial aviation, there are facts and there are rumors or perhaps reheated rumors and what is actually known, depending upon your perspective .

In the first case it is an established fact that Republic Airways Holdings, Inc acquired both Midwest Airlines of Milwaukee and Frontier Airlines of Denver last year, in separate negotiations.

The company has decided to retain Frontier's name and their very distinctive airliner tail fins which carry images of different animals, because the carrier's name has a larger recognition than that of Midwest and a large fan base for the tail fins.

However, both hubs, Milwaukee and Denver will be retained as hubs. Wisconsin's state animal, the badger will also be added to the tail fin line up and the on-board baked chocolate chip cookies will still be served on-board each flight.

The holding company plans to have both company's operations functioning as one system by November 2010 and to have the single brand established and completed by October 2011.

The 2010 plans for the new company include 10 more destinations from the Denver airport and 5 from Milwaukee with a 6 to 7 percent company increase for the year. You can find the latest updates and time-lines at FrontierMidwest.com.

In the next situation, it sounds more like a soap opera where a couple keeps breaking up and getting back together and possibly getting with a third party, or at least the rumors have been of hook ups and break ups with none of the purported parties being all that forthcoming. I started collecting information on this in early April and the events have been unfolding quickly.

However, instead of the names being well known movie stars, politicians or athletes, in this case, the named parties in the rumored situations are US Airways, United and Continental.

This has a long history of rumored interaction between US Airways and United. In 2000 the two companies actually were close to merging when they were blocked by the US Department of Justice.

Then in 2005, US Airways, based in Tempe, Arizona, did marry America West, based in Charlotte, North Carolina, sorry, merged with America West and retained that hub.

US Airways also reportedly approached Delta in 2006 and 2007 about acquiring them. But Delta went for North West instead.

Then in 2008 there's a possibility that the two companies were sneaking in and out of each other's boardrooms, talking on another deal which they are said to have put on hold.

This brings us up to the present time where the two airlines were rumored to be talking again about consolidating their two houses. However the Association of Flight Attendants was protesting the negotiations due to two unresolved issues: 1. The Us Airways/America West merger, from five years ago, has elements that still haven't been dealt with. 2. There are, also, the unaddressed demands for the removal of United Airline's CEO Glenn Tilton, for the past two, years over his poor labor relations and unfinished contract negotiations along with other grievances.

Then there were rumors that Continental would bid for United to protect its business. But no one is talking.

There is a history to this situation, also, where United and Continental were rumored to have talked about merging in 2008. However Continental remained single.

Then there was further news that US Airways did confirm in April 2010, that they were indeed talking with United about becoming one, by stating that they were no longer in talks with United.

This may possibly be due to another rumor which is circulating, that United and Continental began talking about combining just after United began keeping company with Us Airways, sorry, talking with US Airways.

There are also rumors that Continental and United found a glitch in their negotiations since it seems that they may not have agreed on the value of each other's companies. Of course, it's a basic bargaining tactic to undervalue the competition so as to increase the gain of the deal.

According to the latest official news United and Continental have indeed agreed on the pre-nup and have announced a pending wedding, sorry have agreed on an exchange of stock and have announced the planned merger. This agreement depends upon family and official approval, or in corporate language they are awaiting shareholder and regulatory approval.

One clever move in the proceedings is that Continental's CEO would be the acting head of the house and United's CEO would be in name only. Or in other words Continental's CEO would be the acting CEO while United's CEO would become the non-executive Chairman.

I would say that this move would be to get the unions to agree with the plan and to allow United's CEO to still have a job. Continental also has better reputation with the unions.

Continental is also getting several lawsuits from unhappy shareholders who claim that their stock is being undervalued in the combining of assets.

There has also been a protest over the merger put into the Department of Justice, by Rep. Oberstar, Chairman of the House Transportation and Infrastructure Committee. But he also objected to the North West-Delta merger and was ignored by the Department of Justice.

There is a companion rumor that all three airlines in question, United, US Airways and Continental could all become a menage a trois or a threesome.

The rumor mill seems to be operating overtime. The latest possible match-up is rumored to be between American and US Airways. But there are arguments on both sides of the issue, so we will need to wait and see if they make it to the altar or not, or if they are even contemplating combining their families.

So stay tuned as we see or maybe we won't see, if the deals are completed, or not.

Additional Reading:

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Top Websites for Cheap Flights

Top Websites for Cheap Airfares

Sources:

http://www.btnonline.com/businesstravelnews/headlines/article_display.jsp?vnu_content_id=1004082686
Republic To Retire Midwest Mark, Fly Under Frontier Flag, Jay Boehmer

http://milwaukee.bizjournals.com/milwaukee/stories/2010/04/12/daily16.html?ana=e_pft
The Midwest Airlines name will cease to exist under a plan to merge the brand with its sister carrier, Frontier Airlines of Denver.

http://www.bizjournals.com/phoenix/stories/2010/04/05/daily47.html
Report: US Airways, United in merger talks, Phoenix Business Journal, Mike Sunnucks

http://www.bizjournals.com/charlotte/stories/2010/04/05/daily53.html ,Union blasts US Airways, United merger talks, Charlotte Business Journal, Jeff Clabaugh, Washington Business Journal

http://www.bizjournals.com/houston/stories/2010/04/12/daily6.html ,Continental shares hop on analyst upgrade, talk of United bid Houston Business Journal, Christine Hall

http://joesharkeyat.blogspot.com/
US Air: We're No Longer Talking to United About a Merger

http://thetravelinsider.info/2010/email0430.htm
David M Rowell aka The Travel Insider

http://denver.bizjournals.com/houston/stories/2010/04/26/daily1.html
Report: Continental, United Airlines hit obstacle in merger talks

http://news.yahoo.com/s/nm/20100502/bs_nm/us_united
United, Continental boards OK merger: sources, Reuters, Kyle Peterson And Jui Chakravorty, Sun May 2

http://news.yahoo.com/s/ap/20100503/ap_on_bi_ge/us_united_continental
United, Continental agree to combine in $3B deal, Joshua Freed and David Koenig, AP

http://www.unitedcontinentalmerger.com/

http://www.portfolio.com/views/blogs/daily-brief/2010/05/06/united-continental-airlines-merger-hits-air-pocket?ana=e_pft
United-Continental Merger Hits Turbulence, Daily Brief, Marie-France Han

http://www.portfolio.com/business-travel/2010/05/10/taking-stock-of-chances-of-an-american-us-airways-merger/?ana=e_pft , Last Chance for Merger Love?, Mike Sunnucks, May 10, 2010

http://www.btnonline.com/businesstravelnews/headlines/airline_display.jsp?vnu_content_id=1004089497
Oberstar Urges DOJ To Reject United-Continental Merger, Jay Boehmer

http://joesharkeyat.blogspot.com/
United Pilots Signal Better Fit With Continental Than US Air, Thursday, April 15, 2010