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Can CLE Survive A CO/UA Merger In 2010  
User currently offlineXms3200 From Sweden, joined Apr 2005, 109 posts, RR: 0
Posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 8159 times:
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With the imminent departure of the well liked CEO, Kellner, and new CEO, Smisek poised to take over, what are the the chances of CO maintianing a "hub" in CLE. I know at 29 flts. a day, it is actually a focus city, but with the strengths of EWR & ORD so very close and with a very likely merger in 2010 or beyond, will CLE be extinct.

39 replies: All unread, showing first 25:
 
User currently offlineTommy767 From United States of America, joined Aug 2003, 6932 posts, RR: 9
Reply 1, posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 8130 times:

I always knew CLE was barely a hub for CO but 29 mainline flights a day? Thats almost focus city status...

If they do merge (and who knows if that ever will happen) I'd imagine they'd keep it around as a focus city but compared to EWR/ORD/IAD as a true hub the presence of CLE would be redundant.



"KEEP CLIMBING" -- DELTA
User currently offlineCopter808 From United States of America, joined Dec 2000, 1132 posts, RR: 1
Reply 2, posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 8112 times:

Don't hold your breath for a merger, I don't think you will see one for at least another few years. As far as I know Jeff and Larry both feel a merger is not a good idea at this point.

There is no real advantage to a full merger right now--and maybe not ever.


User currently offlineDualQual From United States of America, joined Mar 2006, 793 posts, RR: 1
Reply 3, posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 7996 times:



Quoting Copter808 (Reply 2):
Don't hold your breath for a merger, I don't think you will see one for at least another few years. As far as I know Jeff and Larry both feel a merger is not a good idea at this point.

There is no real advantage to a full merger right now--and maybe not ever.

I agree with this from the standpoint that a merger/aquisition is very captial intensive and neither airline has the capital to facilitate a merger or aquistion of the other. Frankly until either files Ch 11 I think it is unlikely that anything beyond the alliance will come to fruition. If one files then all bets are off since the whole carrier or juicest pieces could be gotten at a much lower investment.

That said, if there is money to be made to line the pockets of Smisek/Tilton et al, things don't have to make financial sense.


User currently offlineCubsrule From United States of America, joined May 2004, 23302 posts, RR: 20
Reply 4, posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 7984 times:



Quoting DualQual (Reply 3):
I agree with this from the standpoint that a merger/aquisition is very captial intensive and neither airline has the capital to facilitate a merger or aquistion of the other.

Who said they have to use their own capital? Certainly, HP and US did not.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineLambertMan From United States of America, joined Aug 2003, 2081 posts, RR: 36
Reply 5, posted (5 years 2 months 3 weeks 2 days 1 hour ago) and read 7985 times:

Sadly Cleveland faces the same predicament St Louis, Pittsburgh, etc. all faced. There are stronger, nearby hubs that can serve the same purpose. Gone are the days in which medium sized cities can host true, domestic airline hubs.

People in the 90's looked back to the 70's and talked about how glamorous air travel was back then. In a few years they will really be saying that. It's a shame what has become of the industry, IMO.


User currently offlineCommavia From United States of America, joined Apr 2005, 11972 posts, RR: 62
Reply 6, posted (5 years 2 months 3 weeks 2 days ago) and read 7890 times:

My personal opinion - short answer: no.

I have long contended that if, hypothetically, United and Continental were to merger, Cleveland would not survive the merger long-term. Chicago can handle the exact same traffic flows with a lot more critical mass and a lot more efficiently. All it would involve would be increasing frequency out of ORD on some key routes or, even more commonly, just upgrading some RJ flying to mainline. That may be an operational challenge short-term, but it would definitely be doable, and it would be a whole lot more efficient then running two entirely separate hubs to serve the exact same traffic flow.

Quoting Xms3200 (Thread starter):
I know at 29 flts. a day, it is actually a focus city

That drastically understates the size of the Cleveland hub, which may not have a whole lot of mainline flying, but has a ton of regional jet service.

Quoting Copter808 (Reply 2):
Don't hold your breath for a merger, I don't think you will see one for at least another few years. As far as I know Jeff and Larry both feel a merger is not a good idea at this point.

Agreed.

I think the context of this question - regarding a Continental-United merger - is very much hypothetical, and I too do not see it happening anytime soon.

Quoting LambertMan (Reply 5):
Sadly Cleveland faces the same predicament St Louis, Pittsburgh, etc. all faced. There are stronger, nearby hubs that can serve the same purpose. Gone are the days in which medium sized cities can host true, domestic airline hubs.

Yep.

These days, the hubs that are surviving long-term and are able to support large amounts of mainline service to markets worldwide are the nation's largest metro areas.

Cleveland is now one of the only small hubs left in America, with the closure in the last five years of St. Louis and Pittsburgh. Cleveland's (and Ohio's) economic situation isn't helping the hub, either.

The U.S. market is now dominated by hubs that are located in massive, economically vital, population centers like Atlanta, Houston, Dallas, Chicago, Minneapolis, Denver, Newark, etc.


User currently offlineNcflyer From United States of America, joined Sep 2000, 494 posts, RR: 1
Reply 7, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7670 times:

Yeah but one thing I have to wonder: With PIT, STL, and soon (most likely) CVG gone, that's a lot of hub capacity taken out, maybe CLE has a place here after all. I mean PIT for instance, and CVG too, these used to be such extensive hubs (in # of destinations if not size of aircraft), where the heck has all that traffic gone?

User currently offlineDualQual From United States of America, joined Mar 2006, 793 posts, RR: 1
Reply 8, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7651 times:



Quoting Cubsrule (Reply 4):

Who said they have to use their own capital? Certainly, HP and US did not.

The second part of that equation is finding someone (or several entities) to front the captial. The problem right now in a tight market is generating the capital to facilitate a combination when said combination may not see any real returns for several years assuming that combo survives in the near term.


User currently offlineCubsrule From United States of America, joined May 2004, 23302 posts, RR: 20
Reply 9, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7627 times:



Quoting DualQual (Reply 8):
The problem right now in a tight market is generating the capital to facilitate a combination when said combination may not see any real returns for several years assuming that combo survives in the near term.

True, but we're looking at - at a minimum - two years down the road. Certainly, if DL and NW are doing well by then, that would strongly suggest to at least some investors that a return is possible.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineCommavia From United States of America, joined Apr 2005, 11972 posts, RR: 62
Reply 10, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7627 times:



Quoting Ncflyer (Reply 7):
Yeah but one thing I have to wonder: With PIT, STL, and soon (most likely) CVG gone, that's a lot of hub capacity taken out, maybe CLE has a place here after all. I mean PIT for instance, and CVG too, these used to be such extensive hubs (in # of destinations if not size of aircraft), where the heck has all that traffic gone?

Capacity needs to come out of the market. Fares are not high enough to support the amount of network airline capacity in the United States these days, which is why - systematically, slowly but surely - we have been seeing capacity come out of the market from network airlines, and seen the remaining capacity concentrated in major markets where network carriers find their core strengths.

Thus, we have seen massive draw-downs in capacity at small hubs in Pittsburgh, St. Louis, and Cincinnati, among others. I predict Cincinnati will be drawn down even further in the future, and Memphis quite possibly will, too.

And yet, simultaneous with capacity reductions at smaller, weaker hubs, AA has stayed fairly stable in capacity at DFW, the same for Delta at Atlanta, Continental in Houston, USAirways in Charlotte, etc.


User currently offlineToltommy From United States of America, joined Dec 2003, 3308 posts, RR: 5
Reply 11, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7621 times:

The biggest plus I can see for CLE is that they would be positioned between two slot controlled hubs. There's not a lot of room for growth at either EWR or ORD, even after the combined network get rationalized.

User currently offlineCubsrule From United States of America, joined May 2004, 23302 posts, RR: 20
Reply 12, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7606 times:



Quoting Commavia (Reply 10):
And yet, simultaneous with capacity reductions at smaller, weaker hubs, AA has stayed fairly stable in capacity at DFW, the same for Delta at Atlanta, Continental in Houston, USAirways in Charlotte, etc.

You probably need to refine your earlier statement about city size; Charlotte is much closer in size to Cincinnati than to Atlanta or Houston.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineCle757 From United States of America, joined Apr 2005, 1144 posts, RR: 0
Reply 13, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7606 times:



Quoting Toltommy (Reply 11):
The biggest plus I can see for CLE is that they would be positioned between two slot controlled hubs. There's not a lot of room for growth at either EWR or ORD, even after the combined network get rationalized

This very true. And would CO be willing to give up a pretty good O&D hub?



Cleveland the best location in the Nation
User currently offlineLambertMan From United States of America, joined Aug 2003, 2081 posts, RR: 36
Reply 14, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7602 times:



Quoting Commavia (Reply 10):

Thus, we have seen massive draw-downs in capacity at small hubs in Pittsburgh, St. Louis, and Cincinnati, among others. I predict Cincinnati will be drawn down even further in the future, and Memphis quite possibly will, too.

Right. As much as I enjoy Memphis for its ease of use, it doesn't have a place in DL's network. Please, don't give me the "it serves small, rural Southeastern towns". That worked with NW, not with DL.

Cincinnati will go too. I hate to be so negative, but I realize where this industry is headed. In my opinion, this is almost like the credit bubble bursting.

The air travel bubble has burst too. The industry needs to sort itself out through a series of mergers (CO/UA makes sense) and draw downs, return to profitability, then go from there. Right now the air travel landscape is still unfeasible.

The forthcoming reductions that I'm almost 100% we will see will show that.


User currently offlineLexy From United States of America, joined Jun 2006, 2515 posts, RR: 8
Reply 15, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7575 times:



Quoting Commavia (Reply 6):
The U.S. market is now dominated by hubs that are located in massive, economically vital, population centers like Atlanta, Houston, Dallas, Chicago, Minneapolis, Denver, Newark, etc.

You are pretty much exactly right and that's the way it's going to be for the foreseeable future. I just have one thing to inject here though. I don't think I would label Denver as a "Massive, economically vital, population center for the United States. When you break it down to nuts and bolts, it's really no larger (in size atleast) than some of the higher tier mid-size markets or lowest tier large-size markets. Economically, I don't think it's considered a huge economic market for the most part when compared to many other "hub" cities. Certainly not like the other cities you listed (I realize it was just an example). A couple of them are considered "Alpha World Cities", like Chicago, and Denver isn't anywhere close to being on that level. But like I said at the beginning, I agree with you and I hate that it's that way in the airline biz., but that's life now.

The only way a mid-size market will see a "hub-like" operation here in the states is with the LCC airlines like WN, perhaps VX, or B6. Outside of that, the legacies are largely abandoning their smaller, mid-market hubs for the most part.



Nashville, Tennessee KBNA
User currently offlineDTWLAX From United States of America, joined Aug 2009, 819 posts, RR: 0
Reply 16, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7569 times:



Quoting LambertMan (Reply 5):
Sadly Cleveland faces the same predicament St Louis, Pittsburgh, etc. all faced. There are stronger, nearby hubs that can serve the same purpose.

Soon CVG will be added to the list as it is sandwiched between DTW and ATL... somewhat similar to CLE being between ORD and EWR.


User currently offlineEwRkId From United States of America, joined Dec 2008, 594 posts, RR: 0
Reply 17, posted (5 years 2 months 3 weeks 1 day 22 hours ago) and read 7557 times:



Quoting Cubsrule (Reply 4):
That drastically understates the size of the Cleveland hub, which may not have a whole lot of mainline flying, but has a ton of regional jet service.

Wasn't that the purpose that CLE was supposed to serve as a reliever to EWR and one of the main problems at EWR was that there were so many ERJ's running around, also isn't that why the Q400'S were bought, they were more efficient and carried about 24 more people then the ERJ's?


User currently offlineFL787 From United States of America, joined Aug 2007, 1551 posts, RR: 12
Reply 18, posted (5 years 2 months 3 weeks 1 day 21 hours ago) and read 7493 times:



Quoting Toltommy (Reply 11):
The biggest plus I can see for CLE is that they would be positioned between two slot controlled hubs. There's not a lot of room for growth at either EWR or ORD, even after the combined network get rationalized.

ORD hasn't had slots for a while now. And with the new runway there is some slack for growth.



717,72S,732/3/4/5/G/8/9,744,752/3,763/4,772/3,D9S/5,M8/90,D10,319/20/21,332/3,388,CR2/7/9,EM2,ER4,E70/75/90,SF3,AR8
User currently offlineAvek00 From United States of America, joined Oct 2004, 4417 posts, RR: 19
Reply 19, posted (5 years 2 months 3 weeks 1 day 21 hours ago) and read 7478 times:

A merger in 2010 would be news and a surprise to CO's and UA's management teams alike. Sure, there's a good chance the airlines might merge in the future, but to be brutally honest, it'd be stupid for them to do so before completing the implementation of the joint ventures and getting onto a common IT platform (all of which will take until at least early 2012 to fully play out).


Live life to the fullest.
User currently offlineBigGSFO From United States of America, joined Jun 2005, 2951 posts, RR: 6
Reply 20, posted (5 years 2 months 3 weeks 1 day 21 hours ago) and read 7447 times:



Quoting Toltommy (Reply 11):
There's not a lot of room for growth at either EWR or ORD, even after the combined network get rationalized.

Also don't forget IAD. There is room for growth there. But what critical market is currently served from CLE and an not served by ORD, EWR or IAD? Probably none.

Cleveland unfortunately will be downsized to a spoke similar to the other mid-sized, mid-continent hubs who were the victims of a merger. Good, bad or indifferent, is the nature of the business.


User currently offlineCALPSAFltSkeds From United States of America, joined Dec 2006, 2725 posts, RR: 9
Reply 21, posted (5 years 2 months 3 weeks 1 day 21 hours ago) and read 7424 times:

For CLE to survive it needs to show profit. If CO can maintain FF base and have good yields, it may stay in the long haul, But, if CO pulls markets and WN comes into the big O&D markets, CO's attraction for being able to take the local market most places in the US, and control of the market will begin to fade. Of course, CO and maybe CO/UA may want to concentrate on their bigger hubs and move aircraft out of CLE. We'll have to wait and see.

It's probably in the same boat as current hubs CVG, STL while others may have gone this route over the years for several carriers - PIT, MCI, SJC, LAS, IAD, IND, BNA, RDU, CMH, DFW, DEN, MSY, MCO BOS, SYR.


User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5599 posts, RR: 7
Reply 22, posted (5 years 2 months 3 weeks 1 day 20 hours ago) and read 7308 times:

I don't know what CLE's fate will be. In its favor, boardings are more than 50% O&D, costs are coming down, and it's generally profitable (but not compellingly so) for CO. Against it, in a merger scenario it is almost 100% redundant to ORD and, while CLE's economy is actually doing better than people including Clevelanders think, it's not going to be a boom town anytime soon.

What is disappointing in hub consolidation is that, as a passenger, I much prefer smaller hubs - CLE for one and MUC I consider the CLE of Europe.  Smile. The best I can say for the monster hubs is that some are less sucky than others.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineThegreatRDU From United States of America, joined Mar 2006, 2311 posts, RR: 4
Reply 23, posted (5 years 2 months 3 weeks 1 day 18 hours ago) and read 7156 times:

-Regardless of merger or not CLE is sure to lose more flights.....Medium sized cities serving as big time hubs are over....
-The DL/NW merger has MEM really obsolete.....MEM can't "relieve" ATL and it has no catchment area over ATL...
-CVG becoming a spoke with service to key hubs is inescapable
-The US domestic market as a whole is still saturated and the expensive RJ flying is taking it's toll
-STL is finally being laid to rest



Our Returning Champion
User currently offlineJolau1701 From United States of America, joined Feb 2009, 239 posts, RR: 0
Reply 24, posted (5 years 2 months 3 weeks 1 day 14 hours ago) and read 7010 times:

I thought that although they are in the same alliance, UA and CO will still compete in some places, just as UA and US does.

UA and CO will still have some amount of ORD - CLE flights as long as they aren't merging, just as UA and US continue to have SFO - PHX flights.


25 Cubsrule : If the merger does not happen, CLE will still be needed as an reliever to EWR. The degree to which it is needed is, obviously, an open question.
26 Post contains links Lightsaber : There is another trhead on metropolitan economies and hubs: Largest US Economies And Airline Hubs (by 21D Sep 28 2009 in Civil Aviation) 26. Clevelan
27 Manfredj : I think the question should be, can CO survice a merger with UA? I cannot think of a more sure fire way to ruin an airline than merge with UA. I'm sor
28 Toltommy : Wrong choice of words. Still almost impossible for new entrants to get access at ORD, however....
29 PlaneAdmirer : There will be no merger without a bankruptcy filing by at least UAL. UAL has total debt of $21.9 Billion and negative tangible equity of $5.15 Billio
30 United1 : Be careful using those numbers they reflect total liability for the company not total debt....there is a difference. It might surprise you that DL is
31 Cubsrule : The fact that VX would not pay the going rate for ground service (a going rate that, it should be pointed out, was acceptable to both HP and DH) does
32 PlaneAdmirer : Liabilities are obligations that have to be paid evenutally. Total liabilities reflect all of the monies owed, and United still owes more than it own
33 United1 : There isn't a single US legacy that doesn't owe more then their assets are worth. Emphasis on eventually as, for example, total liabilities include m
34 PlaneAdmirer : I didn't provide a breakdown of current liabilities, those that must be paid within a year, versus long term liabilities those due more than one year
35 Drerx7 : How would that be smarter. CO and AA route structures overlap so much that neither would gain much except a headache. Dallas/Houston, JFK/EWR, ORD/CL
36 Highflier92660 : I have spent the past day juxtaposing those two airports in my mind. On one hand there is the architectural masterpiece that is the Munich airport wi
37 Greenair727 : A couple of quick responses: 1. CO may be down to 29 flights, but it’s a result of the global economy, not the Cleveland economy. As global demand i
38 DC8FanJet : Exactly..there simply isn't a need. The agreement between UA & CO is so comprehensive, it is really better than a merger,,,it doesn't have the costs.
39 Post contains images MasseyBrown : Great reply!!   And to be completely fair, Munich does have S-Bahn rail direct to Marienplatz, etc. What I meant to compare was the hassle-free natu
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