maxamuus
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CO And WA Merger

Sun Jul 08, 2012 2:33 am

I was reading up on the history of CO. I came across an article about the CEO who committed suicide when the take over of CO was almost all but certain by TI -

http://www.nytimes.com/1981/08/11/bu...continental-without-its-chief.html

It mentioned at the very bottom that Continental and Western had discussed merging but it was put off. I never knew that. I am curious what the sticking points were and why it never came to pass?

(Forgive me if it has been discussed. I did a search and just saw a few passing mentions of the merger but nothing in depth)

[Edited 2012-07-07 19:40:09]
 
codc10
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RE: CO And WA Merger

Sun Jul 08, 2012 2:36 am

Al Feldman's death was terribly sad. He left behind children in their twenties and his wife passed away only a few months prior due to illness. In many ways, it was also the death of Bob Six-era Continental.
 
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TWA772LR
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RE: CO And WA Merger

Sun Jul 08, 2012 2:40 am

CO would've been much more bigger in the western US if it happened. Hubs in SLC and LAX would've been very interesting for CO, and the airline would probably look a lot more different in past years if this merger had happened. Don't you just love the "what ifs?" of the airline industry???
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Beardown91737
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RE: CO And WA Merger

Sun Jul 08, 2012 2:51 am

The WA+CO merger was in the news quite a bit in the late 70s and early 80s. The name would have been Western and Continental. It was in the news at the time but news stories from that timeframe aren't widely available online.There is mention of the merger on the Wikipedia pages for both airlines and it is in line with the news stories I remember.

Both airlines were headquartered in Los Angeles at the time.

With the merger not going through, the biggest winner may have been SLC. It was a PMWA hub that Delta kept. If WA/CO had gone through, then they may have shifted a lot to Denver which was a CO hub at the time.

Back in the late 70s and early 80s, CO (the LA based Proud Bird with the Golden Tail) was my favorite airline, although I had mostly traveled TW while growing up, and UA if I was headed eastbound, but it all ended in the Lorenzo era, and after the move to Houston, they didn't fly the Chicago to California route that I travel most of the time. Back in that day, there were 4 or 5 CO DC10s from ORD-LAX, and their DC10s competed with UA 747s and DC10s on ORD-HNL non-stop.
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mayor
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RE: CO And WA Merger

Sun Jul 08, 2012 3:30 am

DL & CO were also talking in the mid 60s about a merger.....apparently, the main sticking point was the name.........Bob Six wanted Continental and C.E. Woolman, obviously wanted DL.



There was a rumor going around (late 90s, before 9/11) I believe about a DL/CO merger......not sure what stifled that one (if true).
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rampart
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RE: CO And WA Merger

Sun Jul 08, 2012 3:35 am

I remember the merger proposal as well just at the dawn of deregulation, and it had been suggested a time or two before, in the early 70s. Both CO and WA were among the smallest of the trunk lines, retaining routes and cities that would be more appropriate for the local service carriers (e.g. Lawton, Midland and Amarillo for CO, and Casper, Cheyenne, and Sheridan, for WA). Together they would have had a larger critical mass that would be more proportional to (but probably still smaller than) EA and DL. Like EA and DL, Continental+Western would still have had a regional identity. BN and NW would therefore have been smallest of the trunk lines. What if, indeed!

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Polot
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RE: CO And WA Merger

Sun Jul 08, 2012 3:44 am

Quoting mayor (Reply 4):
There was a rumor going around (late 90s, before 9/11) I believe about a DL/CO merger......not sure what stifled that one (if true).

I believe it was a hostile takeover attempt (CO didn't want to merge with DL), and that is when NW invested in CO in order to get the golden share and help block the merger.
 
bohica
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RE: CO And WA Merger

Sun Jul 08, 2012 4:09 am

IIRC the first serious merger attempt was around 1977 before deregulation. The Western-Continental name was decided by a coin toss. The Department of Justice turned down the merger claiming it was anti-competitive.

The second attempt was around 1981. That got thwarted when Frank Lorenzo's Texas Air pulled off a hostile takeover of Continental. That left Western on its own until they merged with Delta.
 
n7371f
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RE: CO And WA Merger

Sun Jul 08, 2012 4:18 am

Al Feldman was previously the head of Frontier Airlines and most historians with knowledge of FL's demise point to his departure beginning the slow rot of the airline.

Feldman took a floundering regional airline, Frontier, and turned it into the darling of the industry among mid-size, regional carriers. Frontier's record quarterly profits under Feldman was nearly unmatched. It was within two years, and during the first tumultuous period of deregulation, that Frontier's fortunes began to turn and quarterly profits became the norm.

Feldman's successor, Glen Ryland, largely ignored the managerial methods that had made Feldman so successful, and Frontier in turn. In fact several of the top managers at Frontier considered leaving for Continental when Feldman made the move.
 
aaway
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RE: CO And WA Merger

Sun Jul 08, 2012 4:20 am

Wow, I was a teen at the time the CO saga was playing out. Though I followed the events - being not only an airline enthusiast, but a Los Angeles resident (both CO and WA being L.A. based) - I didn't possess the business acumen to fully grasp what was transpiring.

In reference to your (OP's) original question, I referred to the book, The Airline That Pride Almost Bought . For some reason, a 1979 merger agreement between CO and WA was rejected by the Civil Aeronautics Board (C.A.B.). In 1980, another merger agreement was crafted by Al Feldman. This later agreement was ultimately approved by the C.A.B., as well as the boards' of CO and WA. But, the respective boards delayed the voting process for shareholder approval of the merger. That delay provided the window for Texas Int'l and Frank Lorenzo to obtain a near-controlling block of CO shares.

As a proxy fight loomed, CO then turned to WA to become a "white knight" investor in an attempt to block Lorenzo/TXI. WA's board rejected the financial terms of this later agreement. Unsaid in the book is why WA rejected the investment. The simple answer (off the top, FWIR) is that WA wasn't in great financial shape. By 1981, WA had racked up a couple of years worth of losses. WA wasn't really heavily indebted - but it didn't have a large cash hoard either. A "white knight" investment in CO would've have taken a substantial amount of cash. The book mentions that WA could've used a portion of its fleet for loan collateral. Apparently, the BoD thought otherwise, considering WA's (then) recent financial performance.

Quoting CODC10 (Reply 1):
Al Feldman's death was terribly sad. He left behind children in their twenties and his wife passed away only a few months prior due to illness.

I knew someone (R.I.P.) who worked for CO's security at the LAX-HQ. at the time of Mr. Feldman's death. On a couple of occasions, he did discuss the event and the immediate aftermath. Indeed tragic for all concerned.
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calpsafltskeds
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RE: CO And WA Merger

Sun Jul 08, 2012 4:28 am

Quoting bohica (Reply 7):
The second attempt was around 1981. That got thwarted when Frank Lorenzo's Texas Air pulled off a hostile takeover of Continental. That left Western on its own until they merged with Delta.

Correct. The WA-CO merger was in the era of trying to prevent Lorenzo from getting CO. CO tried an ESOP to help prevent the takeover and the WA merger fell apart when Lorenzo got control. There were scenarios of TI-CO merger, CO-WA merger and even a three way TI-CO-WA merger.
I was involved from the CO end in the WA merger. At the time, WA had not made much of a move into deregulation, flying many routes they should have canned to move toward a hub structure. I was acutally shocked at how far behind WA was in planning for a deregulated environment. They continued to fly routes like MSP-DEN-PHX hoping to hold onto the 1-stop traffic they had prior to deregulation and non-stop services. Another poor route was DC-10 service LAX-MIA, which they tried to tag NAS to get some traffic on the flights.
CO/WA could have been interesting as they would have been a real presence on the West Coast, Hawaii and from the West Coast via DEN and SLC. As someone mentioned, SLC might have taken a hit with DEN so close by.
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aaway
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RE: CO And WA Merger

Sun Jul 08, 2012 4:36 am

Quoting bohica (Reply 7):
The Department of Justice turned down the merger claiming it was anti-competitive.

Since you mention this, IIRC, the objection was focused on the combined share of the Hawaiian market from the West Coast (primarily Los Angeles). Though 1979 represented the post deregulation era, C.A.B. still presided over many economic and regulatory matters. C.A.B. jurisdictional powers slowly declined until the C.A.B. finally ceased in 1985.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
aaway
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RE: CO And WA Merger

Sun Jul 08, 2012 5:10 am

Quoting CALPSAFltSkeds (Reply 10):
The WA-CO merger was in the era of trying to prevent Lorenzo from getting CO. CO tried an ESOP to help prevent the takeover and the WA merger fell apart when Lorenzo got control. There were scenarios of TI-CO merger, CO-WA merger and even a three way TI-CO-WA merger.

As discussed in The Airline That Pride Almost Bought . One wrinkle - it seems had WA intervened, at very least, the battle for CO would've been protracted. In summary, Lorenzo/TXI were offereing $13.00 per share of outstanding CO stock. The WA "White Knight" plan had WA offering $18.00 per share on a tender by CO. Additionally, WA wanted to get commitments, via proxy, by institutional shareholders for a CO-WA combination. Granted, TXI could've counterbid....

Obviously, an academic exercise in reviewing the history of that particular transaction. I think the actions of the respective boards provided a text book example of how not to contemplate a merger scenario.

Seems the reason for delaying the shareholder approval process for the 2nd merger attempt was related to costs associated with convening the boards and canvassing shareholders during that 1st attempt. The rationale - why waste money for a possibly repeat scenarios - rejection by the C.A.B.
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RWA380
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RE: CO And WA Merger

Sun Jul 08, 2012 4:06 pm

Quoting CALPSAFltSkeds (Reply 10):
Another poor route was DC-10 service LAX-MIA, which they tried to tag NAS to get some traffic on the flights

FLL was also a tag onto that LAX-MIA d10 flight. Other poor routes were the Londoner routes HNL-ANC-LGW and LAX-LAS-DEN-LGW, neither did very well, the first being an empty D10 from ANC to LGW. The big red W was not popular in the U.K. as it was mostly unknown.
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calpsafltskeds
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RE: CO And WA Merger

Sun Jul 08, 2012 7:30 pm

Quoting RWA380 (Reply 13):
FLL was also a tag onto that LAX-MIA d10 flight. Other poor routes were the Londoner routes HNL-ANC-LGW and LAX-LAS-DEN-LGW, neither did very well, the first being an empty D10 from ANC to LGW. The big red W was not popular in the U.K. as it was mostly unknown.

Forgot about the HNL-ANC-LGW flight, which they advertised as being on the great circle route (28 miles longer than non-stop). Reportedly, due to contracts, the flights needed a double cabin crew, which meant there were more crew than passengers much of the time.
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skycub
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RE: CO And WA Merger

Sun Jul 08, 2012 11:07 pm

Was Western not the subject of many, MANY possible mergers over the years?

In fact, If I recall.... there was a time that Air Florida was also targeting Western.
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malaysia
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RE: CO And WA Merger

Sun Jul 08, 2012 11:49 pm

Didnt they have a movie airline called ConWest? that would be a fitting name, just add a C next to the W swizzle
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WALmsp
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RE: CO And WA Merger

Mon Jul 09, 2012 1:15 am

Quoting skycub (Reply 15):

Was Western not the subject of many, MANY possible mergers over the years?

In fact, If I recall.... there was a time that Air Florida was also targeting Western.

IIRC, WA was involved in merger talks with AA in the early 70s and with CO in the mid-70s/early 80s. Air Florida attempted to buy WA in the early 80s before an agreement between DL and WA resulted in their 1987 merger.
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ord
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RE: CO And WA Merger

Mon Jul 09, 2012 1:37 am

Quoting WALmsp (Reply 17):
IIRC, WA was involved in merger talks with AA in the early 70s and with CO in the mid-70s/early 80s.

WA's talks with AA actually resulted in a merger agreement in 1970, but the government eventually did not allow it to go through.
 
bohica
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RE: CO And WA Merger

Mon Jul 09, 2012 1:49 am

Quoting skycub (Reply 15):
Was Western not the subject of many, MANY possible mergers over the years?

In fact, If I recall.... there was a time that Air Florida was also targeting Western.

Yes, Air Florida was once interested in WA. Also there were possible mergers with American, Wein Air Alaska, Continental (twice) to name a few. I'm sure there were others as well.
 
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mayor
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RE: CO And WA Merger

Mon Jul 09, 2012 4:08 am

Quoting bohica (Reply 19):

Yes, Air Florida was once interested in WA.

That was right before the DL/WA merger.
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Schweigend
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RE: CO And WA Merger

Mon Jul 09, 2012 5:52 am

I don't know how or why, but CO did take over WA's hangar at Denver Stapleton on Smith Road, and, until that airport closed in 1995, they used it for two narrowbody heavy check lines.

There was another Western hangar at SFO, identical in most respects to the Stapleton one, taken over by Delta.

Quoting aaway (Reply 9):
In reference to your (OP's) original question, I referred to the book, The Airline That Pride Almost Bought .

Truly a tear-jerker. I was lucky to find an unused copy at a bookseller in Sydney George St. for A$5.

Scottie
 
Aeri28
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RE: CO And WA Merger

Mon Jul 09, 2012 6:37 am

Yes, I remember this welll too. My father worked at LAX for Western Airlines during this period and I remember him all too well saying that there might be a merger and it could result in a move to Denver. This never materilzed but by the time the Delta merge happened, I was long out of the house.

Funny how I grew up in Jr. High and High school with many children of CO and WA employees, as both were HQ'd there, and Westchester was a common location for airline employees.
 
skycub
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RE: CO And WA Merger

Mon Jul 09, 2012 4:52 pm

Quoting malaysia (Reply 16):
Didnt they have a movie airline called ConWest? that would be a fitting name, just add a C next to the W swizzle

Did you actually see that movie? LOL... I forget the name of it... was it something like "International Airport" maybe?

However, that IS EXACTLY what they did in the movie.... used Western's basic livery and added a "C" in front of the "W."
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n7371f
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RE: CO And WA Merger

Mon Jul 09, 2012 9:14 pm

Quoting Schweigend (Reply 21):
I don't know how or why, but CO did take over WA's hangar at Denver Stapleton on Smith Road, and, until that airport closed in 1995, they used it for two narrowbody heavy check lines.

There was another Western hangar at SFO, identical in most respects to the Stapleton one, taken over by Delta.

Continental got the ex-Western hangar from the Frontier acquisition. Frontier acquired the hangar from Western sometime between 1983-84 when it started running out of room at the general office building. Interestingly United owned the hangar for a few months in 1986 during the failed merger with Frontier but gave the property back to Frontier when Continental acquired FL out of bankruptcy and threatened to sue United.

The SFO hangar and the SEA hangar were both transfered to Delta after the 1987 merger.

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