ContinentalEWR
Topic Author
Posts: 3619
Joined: Wed May 24, 2000 2:50 am

CO & Southwest Merger Hypothesis

Tue Oct 17, 2000 4:22 am

First of all, let me say that I am not advocating this!!!!
Although I think Southwest is a fine airline, I don't see
these two airlines (or any major US carriers for that
matter) merging. It is a logistical, labor, and customer
service nightmare. However, should US/UA go through,
I think CO and Southwest would not be such an awful
idea. Continental is starting to test its reputation by
offering point to point services, bypassing its hubs at
CLE, EWR, and IAH albeit in limited fashion. Example:
the recent expansion at LGA, the new flights to and
from Richmond, and the possibility of more.

Southwest is of course the king of point to point
flying on the cheap and does it very well. Has been
profitable for nearly every one of its operating years.

Southwest is an all 737 operator. Continental's US
domestic fleet is supported by a large number of
737's. There is virtually no overlap. Southwest is
strong in the west. Continental is not. Layoffs
would not be a real issue. Both carriers have a
strong management team guiding them.

If mergers do have to happen in the industry, I
would much rather see Continental paired off
with Southwest than with Delta or Northwest.
Delta is a fine airline but there is a lot of over-
lap between them and very different philosophies
about how an airline should be run. Northwest
is a run of the mill airline. It is nothing special,
and has gotten better but is no way near CO
or DL in terms of reliability, service levels, and
operational efficiency.

So, what do you all think?

ContinentalEWR
 
ContinentalEWR
Topic Author
Posts: 3619
Joined: Wed May 24, 2000 2:50 am

RE: CO & Southwest Merger Hypothesis

Tue Oct 17, 2000 10:12 pm

No one has any thoughts on this? C'mon?
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: CO & Southwest Merger Hypothesis

Tue Oct 17, 2000 10:24 pm

It's simple: Southwest won't merge unless its with a "Southwest clone" of which there are few nowadays.

Name one US carrier that:
- Operates 737s exclusively, and
- Has a route structure designed to avoid crowded, congested, hub airports, and
- Is single-class, and
- Does not give seat assignments, and
- Does not code-share, and
- Does not interline, and
- Operates exclusively on ticketlesss travel

The only reason that Southwest bought Morris Air back in the mid-90s was that Morris did all of these things. (They had "business class", but that ended up just getting you an assigned seat - nothing more)

Southwest and Continental have firm business plans, but they both serve separate niches, and that would be disasterous to comibine them. Continental wants to be full-service, Southwest wants to be low-cost, and you do not get to have both.

My bet is that Southwest knows it still has room to grow and will do so independently.
 
akelley728
Posts: 1964
Joined: Tue Dec 07, 1999 12:35 pm

RE: CO & Southwest Merger Hypothesis

Tue Oct 17, 2000 10:37 pm

I do see the posibility of some sort of agreement, alliance, maybe even a merger, with WestJet of Canada. They are a self-professed Southwest clone, operate all 737s, etc., etc.
 
LoneStarMike
Posts: 2802
Joined: Sat Jul 01, 2000 1:02 pm

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 12:00 am

Another problem would be Houston. Have you ever really looked closely a Southwest's non-stop service out of HOU? The majority of their flights are short to medium-haul, to places like MSY, DAL, AUS, SAT, HRL, CRP, etc. Southwest doesn't fly non-stop to California or Florida. They have only 1 daily non-stop departure to BWI, 3 to LAS, 2 to MDW, 5 to PHX, 7 to BNA, 9 to STL, and 1 to MCI. I think HOU is the better choice of airports for the shorter flights. Southwest wouldn't want to move those flights to IAH. Who wants to drive 45 minutes to IAH to take an hour-long flight?

Continental, OTOH, does have a lot of long-haul non-stops out of IAH, and they've no doubt spent a lot of money in expanding the facilities. I don't think they'd want to move back to HOU and besides, there's no room for them to do that anyway.

So if the 2 merged, you'd have a Continental-Southwest with heavy operations out of both IAH and HOU, and I just don't think it would work.

I could see an alliance between the two, maybe. From what I've read, Herb and Gordon get along pretty well. I think Southwest and Continental go out of their way to notcompete with each other too much. Look at CLE. Southwest has 4 gates there, yet they only have 23 departures a day. They could easily add another 15-20 departures a day but they haven't. At IAH, Southwest only flies 7 times a day to DAL. At DAL, Southwest has about 35 flights a day, but only 7 to IAH. Coninental has 12-14 flights per day from DAL-IAH and none to HOU. The two co-exist very nicely together, with each offering a different product. They don't fight with each other, they don't try to undercut each other's fares, and they don't sue each other in court at the drop of a hat. I have the utmost respect for Continental and Southwest for that very reason. It's too bad that some other AAirlines haven't learned how to do that.

I say keep them separate, but maybe have an alliance. No merger, though, please. I'd rather be able to pick from 2 good airlines instead of 1.

LoneStarMike

 
BritishMidland
Posts: 167
Joined: Sat May 27, 2000 4:57 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 3:50 am

For the sake of throwing this out there ... consider this... RyanAir / Southwest. The key is the 737-700ERX with enough fuel to fly BWI-DUB/STN, MCO-DUB/STN, PVD-DUB/STN, MDW-DUB/STN etc. RyanAir is the Southwest of EuroLand, so why not merge these mofo's. It would be Southwest/RyanAir meet Laker (for the TA's). Think about it... what do you think?

Regards,
BD
Enter the new age: A340-500, 777-200LR, 7E7
 
ContinentalEWR
Topic Author
Posts: 3619
Joined: Wed May 24, 2000 2:50 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 4:15 am

That's ridiculous. Ryanair may be profitable, but it is a terrible airline but at
29 GBP per flight, you have no right to complain. Southwest is an excellent,
dependable, and consistently profitable airline whose formula everyonw would like to mimick. Many have tried, few have succeeded.

 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 4:30 am

No Way, No How. Southwests strategy is low costs. One big way of accomplishing this is one aircraft type. Start throwing different aircraft into the mix and costs go up. Start serving meals or assigning seats on Southwest, costs go up. Try to operate them both as "separate entities" won't work either. Look at "CO Lite". CO has a great product. So does Southwest. But Flashmeister hit the nail on the head - they serve a different niche. You can't blend those in without one or the other, or most likely BOTH suffering.
 
Guest

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 4:49 am

Continental could use the aircraft to start another hub somewhere out west.
 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:34 am

AWA320 - while that would delight America West because their low fare competitor just got taken out of the game, I think that the powers that be in Washington would take a reeeeaaaal close look at the prospect of letting go of the biggest low fare carrier in the US so that CO could start a hub.
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:40 am

Not gonna happen. No way...

They'd have to offer a gargantuan premium for WN to get them...
 
mls515
Posts: 2954
Joined: Mon Jun 26, 2000 5:56 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:44 am

>Name one US carrier that:
>- Operates 737s exclusively, and
>- Has a route structure designed to avoid crowded,
> congested, hub airports, and
>- Is single-class, and
>- Does not give seat assignments, and
>- Does not code-share, and
>- Does not interline, and
>- Operates exclusively on ticketlesss travel

Vanguard.
Vanguard. (some airports are, but so are some of Southwest's)
Vanguard.
they do give seat assignments.
Vanguard.
don't know what 'interline' is.
Vanguard.

5 out of 8 ain't bad.
 
Guest

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:50 am

Yeah, if anything it would be a CO buyout, but I don't expect it to happen. Its like National and Pan Am, the two are just so different. WN won't merge with anyone especially not RyanAir.
 
Guest

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:50 am

Vanguard is another airline run by teenagers (the other being AmWest. It's not a serious contender in the airline field...
 
mls515
Posts: 2954
Joined: Mon Jun 26, 2000 5:56 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 5:52 am

How about you back up that statement with facts and tell us about all your experiences with Vanguard.
 
ScottB
Posts: 5414
Joined: Fri Jul 28, 2000 1:25 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 6:30 am

First of all, CO wouldn't be able to buy out Southwest - in fact, I don't think any of the other airlines could. Why? Because Southwest has the largest market capitalization of them all. Too expensive. Besides, CO is trying to cater to the upper end of the market, while WN goes for the lower end (along with business travelers who look for frequency and reasonable fares). Similar corporate culture and approach to employee relations, but trying to merge the business strategies would be a disaster.

As to Vanguard... Why would they ever buy Vanguard? Vanguard isn't currently profitable, and it looks to me like they're well on their way to the corporate equivalent of a controlled flight into terrain (Costs too high, load factors too low). They operate a bunch of 737-200's, which Southwest is phasing out of their fleet. And most of the places they fly are airports WN has assiduously tried to avoid - DEN, ATL, PIT, MSP, etc. Not to be the voice of gloom and doom, but were Vanguard to go under, Southwest could probably pick up the assets it wanted more cheaply in the Bankruptcy Court. I've not flown them, but I hope they turn things around!

Frontier *might* have been a possibility if they hadn't gone Airbus. I don't know if their profitable operation at DEN, based on SWA's model, would have made Herb go back there. Didn't he say something like Hell would freeze over first?
 
mls515
Posts: 2954
Joined: Mon Jun 26, 2000 5:56 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 6:35 am

I've flown Vanguard. They're a good airline as far as service goes, but you're right. They're not on the right business track. I'm afraid they'll phase out of existence in the next couple of years.
 
LoneStarMike
Posts: 2802
Joined: Sat Jul 01, 2000 1:02 pm

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 8:19 am

Herb said Southwest would return to DEN "When cows fly". If they ever do go back, I guess they'll have a new special livery jet called Bovine One

LoneStarMike

 
Republic
Posts: 541
Joined: Thu Dec 27, 2012 12:39 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 8:36 am

Two major obstacles:

First, Northwest owns 14% of CO. More importantly, NW controls the voting shares of CO. Hence, NW controls any potential merger by CO. A CO/WN merger is not in NW's interests.

Second, a hypothetical CO/WN merger would face the same type of merger problems as DC is with a potential UA/US merger. CO/WN make up the majority of traffic out of Houston. Now they would have to create a new version of DCAir, a HouAirways or something of the like.

Interesting question though.

Republic
 
fjnovak1
Posts: 574
Joined: Wed Apr 05, 2000 2:23 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 8:46 am

One more interesting thing to note; a few, if not all of Vanguard's 737-200adv jets are ex-Southwest planes already.

Thus its unlikely they'd merge or be united in bankruptcy court. If WN had those planes once and got rid of them, why would they want them back?

I know this wouldn't likely happen because costs are too high, but Aloha Airlines and Southwest would be a good match fleetwise. It'd be cool to see the Southwest 737-700s flying across to Honolulu and short hopping to Maui! Maybe an alliance with Aloha and WestJet is possible years and years down the road....
Go Blue!!
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 9:17 am

Actually, Frontier is very profitable at DEN, but they also cater to business travellers - they have a first class now (I think), and they do all of the interlining, assigned seating, etc., that I mentioned in my previous post. They could have been a viable merger partner, but not now, especially because of the Airbus deal.
 
EVA744
Posts: 147
Joined: Wed Oct 11, 2000 1:11 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 1:30 pm

Speaking of Market Cap....

WN has the market cap of UA, AA and DL combined!

That's right boys and girls ... WN could in effect do a stock-swap buy-out with UA, AA and DL and own them all. Interesting huh?

EVA744
 
mls515
Posts: 2954
Joined: Mon Jun 26, 2000 5:56 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 1:40 pm

Really.....

That reminds me of the movie Demolition Man, "Now all restaurants are Taco Bell."


"Now all airlines are Southwest Airlines."  
 
ny-jfk-lga
Posts: 331
Joined: Sat Jan 22, 2000 2:09 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 2:19 pm

If there was to one airline in our skies, I most DEFINITELY would NOT want that one with the "shit colors."
Bring back McDonnell Douglas & T W A!!
 
mls515
Posts: 2954
Joined: Mon Jun 26, 2000 5:56 am

RE: CO & Southwest Merger Hypothesis

Wed Oct 18, 2000 2:21 pm

Colors, now that's a good measure of the quality of an airline!
 
Guest

Never Gonna Happen...

Thu Oct 19, 2000 12:05 am

Just letting you know, that my response on this thread earlier was just because I was bored. There are hundreds of reasons why this would NEVER happen.

These are two fantastic carriers and I have a feeling that they will be operating independently for a very very long time.

However, I wouldn't be surprised if Continental snatched up a smaller carrier such as America West or Alaska... Both of those ideas are far-fetched, but if it were to happen, I think it would be America West.

 
ScottB
Posts: 5414
Joined: Fri Jul 28, 2000 1:25 am

RE: CO & Southwest Merger Hypothesis

Thu Oct 19, 2000 3:45 am

Actually I thought Vanguard was getting its 732's from USAirways - the ones they decided they wouldn't need for MetroThreat. I looked at the 737-100/200 census and 4 of their planes (early-80's manufacture) came from US. The rest seem to be quite the hodgepodge - one looks like it originally belonged to United.

In any case, I don't think Vanguard has much that WN would want. Except maybe a few more gates at MCI and MDW.  

Now a CO-Frontier merger wouldn't have been so far-fetched before the Airbus buy... Depends on how happy Denver would be to see CO as their second-largest carrier again. Doesn't fit into the fleet plan anymore, though.

Maybe an unmerged US with TWA and/or Vanguard and/or Frontier to give them a Midwest/Western hub... yeah, right.  
 
747-451
Posts: 2327
Joined: Wed Oct 04, 2000 5:50 am

RE: Never Gonna Happen...

Thu Oct 19, 2000 3:51 am

I don't think CO is going to do anything, since Northwest owns a chunk of them. What may happen is Northwest may purchase CO, since it would enhance NW's market in a lot of places and CO's domestic routes would be a nice feed for NW's international system.

I am not biased for or against as "747-451". Theirs just happens to be a 400 I soent so much time on....

-451
 
EVA744
Posts: 147
Joined: Wed Oct 11, 2000 1:11 am

RE: CO & Southwest Merger Hypothesis

Thu Oct 19, 2000 3:53 am

If CO were to buy Frontier, that would be interesting, because CO could still operate them seperately, ie: feed. Frontier would be itself a self-supporting entity, with its own fleet etc. Like a Brand.
    Continental's Future if they were to buy Frontier:

  • Continental Mainline
  • Continental Express
  • CO Lite (does that still exist?)
  • Continental Frontier

    EVA744
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