Lately I’ve been interested in UA’s strategy after 9/11. I know that they filed for bankruptcy at the end of 2002 but was their an actual fear of them possibly going into Chapter 7? Were their employees worried about that possibility?

I want to say United was in cost cutting mode well before 9/11 and the subsequent aftermath started a lot of bankruptcies in the industry- and then the late 2000s economic crises didn't help either. Someone more informed will certainly respond.

There was concern about a Chap 7 filing and mgmt played that threat against the employees for wage and benefit cuts. I personally believe there was a liquidity level below which a filing would have probably occurred. It was not the most pleasant environment to work under. The company was also losing a significant amount of $$ before 9/11. My decision to retire 14 months early was clearly influenced by the possibility of a chapter 7, combined with some medical issues I was experiencing.

[url]https://abcnews.go.com/Business/story?id=87893&page=1[/url"ByABC News
January 6, 2006, 1:33 AM
C H I C A G O, July 27, 2001 -- United Airlines and US Airways Group called off their $4.3 billion deal today after the Justice Department said it would sue to block the acquisition. Justice officials said earlier today that the proposed combination, which would have created the world's largest airline, would have reduced competition, raised fares and harmed consumers.".

An interesting aside:

https://abcnews.go.com/Business/story?id=87893&page=1
"United and US Airways had sought to allay regulators' antitrust concerns with plans for a new airline partly owned by American Airlines to take over US Airways flights out of Washington and by letting American take more than half of US Airways East Coast shuttles.".

https://money.cnn.com/2000/05/24/worldbiz/united/
"May 24, 2000: 7:41 a.m. ET
Largest airline to pay $4.3B cash, assume $7B in debt for No. 6 carrier
NEW YORK (CNNfn) - United Airlines announced Wednesday it is buying struggling US Airways for $4.3 billion in cash -- a move that would strengthen its position as the world's largest airline.

United's parent company, UAL Corp., said it agreed to pay $60 a share for US Airways, the nation's sixth-largest carrier -- 130 percent above its closing price Tuesday -- or a total of $4.3 billion. It would also assume $7.3 billion in debt and aircraft leases in the deal, which would give it access to US Airways' lucrative East Coast routes."

They sure knew how to come up with enough, to consider merging with US Airways, twice.

Perhaps had they better invested in themselves, their products and their employees - they would have been better off. While I get that mergers happened, and that CO was the partner that they ended up with, its difficult as an employee to see that much money going to support another carrier/career when, had they grown on their own - they could have had marketshare, and the ability to command on their own. I get that it was 'merger or die' (perceived) time, but also - that was the moment of inevitability. United had, for decades prior, on of the strongest brand names/images/legacies and the business acumen to succeed. What they were hoping to achieve in purchasing US, they could have and should have done on their own, over decades and hard work. Their employees, and company would have been better for it.

OP ought to spend some time with UA's history of three rejections for the post-9/11 Federal loan guarantees which were received by HP, US and others.

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf

MIflyer12 wrote:

OP ought to spend some time with UA's history of three rejections for the post-9/11 Federal loan guarantees which were received by HP, US and others.

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf

I am genuinely perplexed here. To your credit (and thank you so much for providing the information and the link)

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf
"$390 million for America West Airline (backing a loan of $429 million)
... and had conditionally approved a loan guarantee of $900 million for US Airways. (11)
- Despite the offer of restructuring assistance from the ATSB, however, US Airways was unable to secure sufficient concessions from creditors, suppliers and labor quickly enough to prevent it from having to seek protection from the bankruptcy courts, which it did on August 11, 2002. (12)
- The ATSB did not rescind its loan guarantee, but on August 12, 2002, issued a letter confirming that the offer was still open, “subject to the conditions set forth in the Board’s July 10 letter to US Airways and to the bankruptcy court’s confirmation of a plan of reorganization.”(13)
- As of early December 2002, US Airways was still in bankruptcy negotiations. (14)

United Airlines’ request for a $1.8 billion loan guarantee was rejected on December 4, 2002, (16)
and on December 9, UAL Corp., the parent company of United Airlines, also sought protection from the bankruptcy court while it continued to negotiate with creditors and unions to restructure.". (15)

-denied Vanguard Airlines its requested loan guarantee on July29,2002,
- and had denied NationalAirlines,Inc. and
-denied Spirit Airlines, Inc., federal loan guarantees on Aug. 14, 2002.

On the other hand, it conditionally approved an application by American Trans Air, Inc. for a loan guarantee on September 26, 2002, and
conditionally approved guarantees for Frontier Airlines and Aloha Airlines in early November.

The remaining applications (by Corporate Airlines, Evergreen International Airline, Gemini Air Cargo, Great Plains Airlines, MEDjet International, and World Airways) were apparently still pending.

How many of those carrier received the funding, and are still operating independently today? What was the criteria for approval/denials? What was UA's position (perceived, or otherwise) that effected their rejection from the program?

I seem to recall UA being in pretty poor shape leading in the year or so before IIRC. I recall there was a massive cost-cutting program put in place in the year 2000, due to the dot-com bubble (UA was hit the hardest of all the legacies IIRC because of their SFO hub), the Summer 2000 meltdown (I don't remember it that much other than what was on the news at the time, but it must have been pretty bad as the UA CEO at the time appeared in a TV ad to apologize: https://www.youtube.com/watch?v=zhK-Mp7TABs), and the 1997 Asian Financial Crisis.

fireman0174 wrote:

There was concern about a Chap 7 filing and mgmt played that threat against the employees for wage and benefit cuts. I personally believe there was a liquidity level below which a filing would have probably occurred. It was not the most pleasant environment to work under. The company was also losing a significant amount of $$ before 9/11. My decision to retire 14 months early was clearly influenced by the possibility of a chapter 7, combined with some medical issues I was experiencing.

Do you think mgmt thought that Ch.7 was a real possibility or that they did that to get wage and benefit cuts from employees like you said?

flyboy80 wrote:

I want to say United was in cost cutting mode well before 9/11 and the subsequent aftermath started a lot of bankruptcies in the industry- and then the late 2000s economic crises didn't help either. Someone more informed will certainly respond.

It seems like AA was in a similar position before 9/11 due to their poorly timed acquisition of TWA.

Rajahdhani wrote:

MIflyer12 wrote:

OP ought to spend some time with UA's history of three rejections for the post-9/11 Federal loan guarantees which were received by HP, US and others.

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf

I am genuinely perplexed here. To your credit (and thank you so much for providing the information and the link)

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf
"$390 million for America West Airline (backing a loan of $429 million)
... and had conditionally approved a loan guarantee of $900 million for US Airways. (11)
- Despite the offer of restructuring assistance from the ATSB, however, US Airways was unable to secure sufficient concessions from creditors, suppliers and labor quickly enough to prevent it from having to seek protection from the bankruptcy courts, which it did on August 11, 2002. (12)
- The ATSB did not rescind its loan guarantee, but on August 12, 2002, issued a letter confirming that the offer was still open, “subject to the conditions set forth in the Board’s July 10 letter to US Airways and to the bankruptcy court’s confirmation of a plan of reorganization.”(13)
- As of early December 2002, US Airways was still in bankruptcy negotiations. (14)

United Airlines’ request for a $1.8 billion loan guarantee was rejected on December 4, 2002, (16)
and on December 9, UAL Corp., the parent company of United Airlines, also sought protection from the bankruptcy court while it continued to negotiate with creditors and unions to restructure.". (15)

-denied Vanguard Airlines its requested loan guarantee on July29,2002,
- and had denied NationalAirlines,Inc. and
-denied Spirit Airlines, Inc., federal loan guarantees on Aug. 14, 2002.

On the other hand, it conditionally approved an application by American Trans Air, Inc. for a loan guarantee on September 26, 2002, and
conditionally approved guarantees for Frontier Airlines and Aloha Airlines in early November.

The remaining applications (by Corporate Airlines, Evergreen International Airline, Gemini Air Cargo, Great Plains Airlines, MEDjet International, and World Airways) were apparently still pending.

How many of those carrier received the funding, and are still operating independently today? What was the criteria for approval/denials? What was UA's position (perceived, or otherwise) that effected their rejection from the program?

Carriers had to submit justification and a business plan. In reviewing UA’s plan, the thought was the business plan was based too much on planned revenue gain initiatives and not enough on cost reduction, and therefore not realistically achievable.

Honestly, in hindsight it was probably in their best interest that it played out that way, forcing them into Chapter 11 where they were able to get their house in order under court protection. It likely gave them the long-term sustainability they desperately needed.

UA had experienced a summer from hell in 2000, a year before 9/11, with labor management strife at an all time high, resulting in wage concessions granted, notably to pilots. UA entered 2001 with one of the highest per-seat-mile costs of the big US carriers. These were factors contributing to the Chapter 11 filing, which resulted in UA being in bankruptcy for 4 years (2002 to 2006).

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

Not sure that is entirely true. UA set itself up for higher costs pre-9/11 and its network weaknesses were fully exposed when the pre-9/11 planned US/UA merger was under consideration. UA emerged from 9/11 with many problems lacking solutions. The network was still a problem, dispatch reliability was poor, thanks to a lot of deferred maintenance, and the product was just so. They did roll out the lie flat beds in United Business, but beyond that, everything Tilton was focused on pointed to merging with someone. Anyone. The merger with CO was an absolute mess. Poorly executed, done on the cheap and the folks that ran CO were seen as more seasoned at that but not so great at taking on so many challenges at once.

The Summer of Love in 2000 and (nobody is mentioning it) a weaker economy in late 2000 all played a role.

There were ads on TV apologizing and relations with employees were horrendous.


Nowadays it is almost comical to read about the possibility of Chapter 7 for an airline

Airlines are cash heavy and profit weak…But as long as they have somebody willing to finance them chapter 11 will now be used every time.

Did United being the target of terrorists impact them and AA more than other airlines? I know US suffered because DCA was closer for several months.

IFLYUA767 wrote:

fireman0174 wrote:

There was concern about a Chap 7 filing and mgmt played that threat against the employees for wage and benefit cuts. I personally believe there was a liquidity level below which a filing would have probably occurred. It was not the most pleasant environment to work under. The company was also losing a significant amount of $$ before 9/11. My decision to retire 14 months early was clearly influenced by the possibility of a chapter 7, combined with some medical issues I was experiencing.

Do you think mgmt thought that Ch.7 was a real possibility or that they did that to get wage and benefit cuts from employees like you said?

My opinion only.

There's no doubt in my mind that the employees were the real "target", along with others.

I also feel that the Chapter 7 possibility was real, I just don't know how "real" it was.

Rajahdhani wrote:

[
How many of those carrier received the funding, and are still operating independently today? What was the criteria for approval/denials? What was UA's position (perceived, or otherwise) that effected their rejection from the program?

It's moving us a little from the topic, but:

Frontier got a guarantee - and then had a Chapter 11 bankrupctcy filing in 2008, anyway

US got a guarantee - and then had Ch 11s in 8/2002 and again in 9/2004

America West got a guarantee, and then picked up US post 2nd bankruptcy in 2005

Don't forget the $5 Billion in industry grants as well as the authorized $10 in loan guarantees.

HP+US+AA is today's AA.

One might interpret UA's repeated rejections for funding as the board's view that United wasn't as bad off as HP or US.

https://www.nytimes.com/2004/09/15/busi ... pt-11.html

NW didn't ask for a guarantee - it was successful securing funding with its Narita route authorities and gates.

IFLYUA767 wrote:

flyboy80 wrote:

I want to say United was in cost cutting mode well before 9/11 and the subsequent aftermath started a lot of bankruptcies in the industry- and then the late 2000s economic crises didn't help either. Someone more informed will certainly respond.

It seems like AA was in a similar position before 9/11 due to their poorly timed acquisition of TWA.

There was never a good time to acquire TWA. TWA should have gone into chapter 7 bankruptcy after which AA could pick the bones. Going into chapter 11 meant more complexity and more expense for AA to merge with TWA. Ultimately it lead to AA's own chapter 11 bankruptcy.

tpaewr wrote:

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

And we saw how CO management did after the merger a mess a bunch of clowns. I am not saying UA Mgt was any better but before the merger UA was moving in the right direction and would have made it with out the CO baggage.

MIflyer12 wrote:

OP ought to spend some time with UA's history of three rejections for the post-9/11 Federal loan guarantees which were received by HP, US and others.

https://mckinneylaw.iu.edu/ilr/pdf/vol36p367.pdf

To this day I still believe it was all political and thousands of us lost our careers to this nonsense from the administration. We deserved the life line like everyone else and IMHO especially more since we were involved in 9/11.

01pewterz28 wrote:

To this day I still believe it was all political and thousands of us lost our careers to this nonsense from the administration. We deserved the life line like everyone else and IMHO especially more since we were involved in 9/11.

Well, not everyone else got a loan guarantee: AA, DL, CO, NW, Alaska, Hawaiian did not. UA was weak from labor actions and poor labor productivity (as remarked above) before 9/11.

01pewterz28 wrote:

And we saw how CO management did after the merger a mess a bunch of clowns. I am not saying UA Mgt was any better but before the merger UA was moving in the right direction and would have made it with out the CO baggage.

Wo wo wo wo wo stop while you are ahead and let's think about this.

I wasn't going to comment on this thread until I read this comment.

I started with sUA and there was a threat of liquidation before bankruptcy, but after bankruptcy that threat was gone but let's not pretend United was moving in the right direction or that United was in position to compete in the future with the newly merger NW/DL. Just pause for a moment and look at United's domestic operation pre-merger, we had a struggling hub at IAD, we had ORD, then DEN was a hub we couldn't defend which opened the door for WN to come in and takeover for a few years, we were in trouble at LAX, and hurting at SFO because of the Dot.com burst. United had no hub in Texas, no hub in the Southeast and no hub in the Northeast. Fleet wise United was short on narrowbodies because a short sighted CEO at the time retired the entire 737 fleet with no replacement. I'll never forget when Glenn Tilton told employees there is no money to be made in the domestic market. Then we have our widebody fleet while UA managed to come out of bankruptcy with still one of if not the largest widebody fleet in the US we had neglected the 744s and 763s so much that their dispatch reliability was terrible.

Make no mistake post bankruptcy although there was no fear of United liquidating like Pan Am, United was still very much in survival mode and we were not prepared to go head to head with DL/NW.

tpaewr wrote:

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

I'm not sure Continental had the fleet to do anything substantive with DEN and they for sure didn't have the fleet to take advantage of SFO. With the head start DL/NW had in their merger if United struggles had continued and had we not merged with Continental I believe the newly merged Delta would have put up a fight to take SFO away from United, because Delta was the only carrier who had the right widebodies and enough money to force United out of SFO. Although American had enough widebodies that they could have committed to SFO, American didn't have the money required to take SFO from United, Delta/Northwest did. Delta would have taken SFO long before Continental could even formulate a business plan.

United on its own could not have competed against DL/NW, but if truth be told neither could Continental, and that isn't a slight at Continental it is simply facts. The truth is neither of these carriers alone stood a chance against DL/NW, not domestically or internationally in Europe or Asia. If Delta and Northwest had not merged then perhaps but once that merger happened whether people like it or not Continental and United needed each other. The merger was the quickest way to eliminate the glaring holes in each airlines network, now the only hole United has in its network domestically is the Southeast. The merger was also the quickest way for each airline to address their fleet problems Continental had a widebody problem (they didn't have enough and no the 787s would have change that because of delays in certification of the 787 and the DL/NW merger again Delta already had a big lead thanks to Northwest's sizable widebody fleet) and the merger partially addressed United's narrowbody problem. The merger of CO/UA was the quickest way for both airlines to defend themselves against the newly merged Delta Airlines.

01pewterz28 wrote:

tpaewr wrote:

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

And we saw how CO management did after the merger a mess a bunch of clowns. I am not saying UA Mgt was any better but before the merger UA was moving in the right direction and would have made it with out the CO baggage.

CO was a GREAT airline under Gordon Bethune and Larry Kellner. However, they started to slip when Jeff Smisek took over, things started to slip. I think if CO had stayed independent we would have seen the same deterioration in product, reliability, and network that we saw with the merged ContiNited.

UA was “better” off after Ch. 11 but they had the structural problems mentioned above. UA would fly CR7s on mid-cons that legacies used 737s/320s/DC9s/S80s on. They introduce ExPlus to alleviate some of the competitive disadvantage but it wasn’t a long term solution. F9 made inroads at DEN and then WN came in and really shook up the market. They didn’t have the right aircraft (see above) to properly run coastal hubs which cost them at LAX and IAD as well as SFO to some extent. PMUAs hub structure was nothing to sneeze at and they should have been able to do more with them than they did. They had hubs in the 2nd and 3rd largest United States cities, the nation’s capitol, and an emerging tech hub located in a prime spot for national connections.

CO gave UA a hub in Texas as well as the biggest single airport hub in the NY area. The problem is, it was all squandered. Smisek had the same view of the domestic market that Tilton had. I remember Smisek saying something to the effect of “we need a robust international network and a domestic network, NO LARGER THAN NEEDED to support it.” This led to the merged CO-UA squandering the (arguably) best set of hubs of any airline in the country. They never could unlock that potential even after the CO merger because the combined entity was still short on mainline narrowbodies and used too many 50 seat regional jets. This issue is FINALLY being alleviated and I applaud the current management team for their boldness in this area as it needed to happen a decade ago. Maybe now they can finally begin to unlock the potential of their great hub network.

jayunited wrote:

01pewterz28 wrote:

And we saw how CO management did after the merger a mess a bunch of clowns. I am not saying UA Mgt was any better but before the merger UA was moving in the right direction and would have made it with out the CO baggage.

Wo wo wo wo wo stop while you are ahead and let's think about this.

I wasn't going to comment on this thread until I read this comment.

I started with sUA and there was a threat of liquidation before bankruptcy, but after bankruptcy that threat was gone but let's not pretend United was moving in the right direction or that United was in position to compete in the future with the newly merger NW/DL. Just pause for a moment and look at United's domestic operation pre-merger, we had a struggling hub at IAD, we had ORD, then DEN was a hub we couldn't defend which opened the door for WN to come in and takeover for a few years, we were in trouble at LAX, and hurting at SFO because of the Dot.com burst. United had no hub in Texas, no hub in the Southeast and no hub in the Northeast. Fleet wise United was short on narrowbodies because a short sighted CEO at the time retired the entire 737 fleet with no replacement. I'll never forget when Glenn Tilton told employees there is no money to be made in the domestic market. Then we have our widebody fleet while UA managed to come out of bankruptcy with still one of if not the largest widebody fleet in the US we had neglected the 744s and 763s so much that their dispatch reliability was terrible.

Make no mistake post bankruptcy although there was no fear of United liquidating like Pan Am, United was still very much in survival mode and we were not prepared to go head to head with DL/NW.

tpaewr wrote:

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

I'm not sure Continental had the fleet to do anything substantive with DEN and they for sure didn't have the fleet to take advantage of SFO. With the head start DL/NW had in their merger if United struggles had continued and had we not merged with Continental I believe the newly merged Delta would have put up a fight to take SFO away from United, because Delta was the only carrier who had the right widebodies and enough money to force United out of SFO. Although American had enough widebodies that they could have committed to SFO, American didn't have the money required to take SFO from United, Delta/Northwest did. Delta would have taken SFO long before Continental could even formulate a business plan.

United on its own could not have competed against DL/NW, but if truth be told neither could Continental, and that isn't a slight at Continental it is simply facts. The truth is neither of these carriers alone stood a chance against DL/NW, not domestically or internationally in Europe or Asia. If Delta and Northwest had not merged then perhaps but once that merger happened whether people like it or not Continental and United needed each other. The merger was the quickest way to eliminate the glaring holes in each airlines network, now the only hole United has in its network domestically is the Southeast. The merger was also the quickest way for each airline to address their fleet problems Continental had a widebody problem (they didn't have enough and no the 787s would have change that because of delays in certification of the 787 and the DL/NW merger again Delta already had a big lead thanks to Northwest's sizable widebody fleet) and the merger partially addressed United's narrowbody problem. The merger of CO/UA was the quickest way for both airlines to defend themselves against the newly merged Delta Airlines.

I think the merger needed to happen but I think that it was executed in a very poor way. Smisek seemed very disconnected from the airline. Also why did Tilton retire the 737s without a replacement. When liquidation was threatened, do you think mgmt was just bluffing or using it as a scare tactic?

Also worth pointing out that while CO generally was in better shape, things were starting to change by the late 2000s. CO hadn't turned a profit for several quarters, and it had a lot of debt payments due in 2010 and beyond. All those brand new 737NGs they bought 10-15 years prior weren't free, as good of a price Gordy got them for.

Kelleher was still concerned about UA's financial situation, and that's partly why we ended up with the "dating until we get married" codeshare arrangement in 2008/2009. But there's no question that CO's future would have been far less bright had UA merged with ugly girl US instead.

Yep I would hardly characterize CO or UA being the savior of the other. I think the merger was necessary and good for both airlines.

Keep in mind the previous 10 years 2000-2010 were tough for the legacies. There were many years of losses, time in bankruptcy and some necessary network shrinking, and WN and the LCCs eating their lunches. All six of the legacies needed to consolidate to regain network strength, regain a competitive footing, and rebuild the revenue premium they once possessed.

Once DL/NW signed a merger deal, the other four really had no choice.

I wouldn’t suggest any of them needed the other more, just that they all needed a new game plan and consolidation was the key. Thus far, it seems to have worked!

IFLYUA767 wrote:

Lately I’ve been interested in UA’s strategy after 9/11. I know that they filed for bankruptcy at the end of 2002 but was their an actual fear of them possibly going into Chapter 7? Were their employees worried about that possibility?

I think to better understand where UA was financially post 9/11, it might be good to have a bit of historical context from the immediate years pre 9/11:

Formation and cessation of the United ESOP
https://www.nceo.org/observations-emplo ... -ownership

Pilots receive new contract
https://www.nytimes.com/2000/10/26/busi ... nited.html

Please post links for factual discussion.

IFLYUA767 wrote:

jayunited wrote:

01pewterz28 wrote:

And we saw how CO management did after the merger a mess a bunch of clowns. I am not saying UA Mgt was any better but before the merger UA was moving in the right direction and would have made it with out the CO baggage.

Wo wo wo wo wo stop while you are ahead and let's think about this.

I wasn't going to comment on this thread until I read this comment.

I started with sUA and there was a threat of liquidation before bankruptcy, but after bankruptcy that threat was gone but let's not pretend United was moving in the right direction or that United was in position to compete in the future with the newly merger NW/DL. Just pause for a moment and look at United's domestic operation pre-merger, we had a struggling hub at IAD, we had ORD, then DEN was a hub we couldn't defend which opened the door for WN to come in and takeover for a few years, we were in trouble at LAX, and hurting at SFO because of the Dot.com burst. United had no hub in Texas, no hub in the Southeast and no hub in the Northeast. Fleet wise United was short on narrowbodies because a short sighted CEO at the time retired the entire 737 fleet with no replacement. I'll never forget when Glenn Tilton told employees there is no money to be made in the domestic market. Then we have our widebody fleet while UA managed to come out of bankruptcy with still one of if not the largest widebody fleet in the US we had neglected the 744s and 763s so much that their dispatch reliability was terrible.

Make no mistake post bankruptcy although there was no fear of United liquidating like Pan Am, United was still very much in survival mode and we were not prepared to go head to head with DL/NW.

tpaewr wrote:

What an interesting world that would have been with UA into 7. CO made no secret of its desire to return to DEN. I hope SFO could have been absorbed too. Letting the rest go.


CO new fleet of 787 would have been decisive…….oh wait they still were, just pained with UNITED on them sadly.

I'm not sure Continental had the fleet to do anything substantive with DEN and they for sure didn't have the fleet to take advantage of SFO. With the head start DL/NW had in their merger if United struggles had continued and had we not merged with Continental I believe the newly merged Delta would have put up a fight to take SFO away from United, because Delta was the only carrier who had the right widebodies and enough money to force United out of SFO. Although American had enough widebodies that they could have committed to SFO, American didn't have the money required to take SFO from United, Delta/Northwest did. Delta would have taken SFO long before Continental could even formulate a business plan.

United on its own could not have competed against DL/NW, but if truth be told neither could Continental, and that isn't a slight at Continental it is simply facts. The truth is neither of these carriers alone stood a chance against DL/NW, not domestically or internationally in Europe or Asia. If Delta and Northwest had not merged then perhaps but once that merger happened whether people like it or not Continental and United needed each other. The merger was the quickest way to eliminate the glaring holes in each airlines network, now the only hole United has in its network domestically is the Southeast. The merger was also the quickest way for each airline to address their fleet problems Continental had a widebody problem (they didn't have enough and no the 787s would have change that because of delays in certification of the 787 and the DL/NW merger again Delta already had a big lead thanks to Northwest's sizable widebody fleet) and the merger partially addressed United's narrowbody problem. The merger of CO/UA was the quickest way for both airlines to defend themselves against the newly merged Delta Airlines.

I think the merger needed to happen but I think that it was executed in a very poor way. Smisek seemed very disconnected from the airline. Also why did Tilton retire the 737s without a replacement. When liquidation was threatened, do you think mgmt was just bluffing or using it as a scare tactic?

To add, per the Chicago Times (at the time, October, 29th, 2009):

https://www.chicagotribune.com/news/ct-xpm-2009-10-29-0910280754-story.html
The plane was the last of 94 Boeing 737s that United has grounded since September 2008. That painful maneuver cost thousands of United workers their jobs but likely saved the carrier from financial calamity as the travel market collapsed last winter following Wall Street's meltdown, analysts said.

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

N1120A wrote:

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

Lots of inaccuracies here. Continental's financial situation in the immediate run up to the merger had deteriorated somewhat, but the company was not at risk of bankruptcy. The problem was the global financial crisis, a drop in air travel demand, and high oil prices that came with the Great Recession. The airline's long haul fleet was fairly small, that's true, limited to 20 777-200ERs, 16 767-400ERs, and 10 767-200ERs, with 41 757-200s all ETOPS certified and many deployed on a number of TATL routes, but CO was far from hamstrung in its ability to fund airplane leases. The company recovered well and had a strong balance sheet in the years following Gordon Bethune taking over. UA was, as CO would find out in first phases of the merger, a mess. During its long bankruptcy, UA deferred a lot of maintenance that was not required to keep the fleet airworthy. Hence, the 747 fleet, at one point, was isolated to SFO, to keep them all close to the maintenance bays there and reduce the delays they were causing on a number of flagship routes they were assigned to at the time. The 767-300ERs also were in bad shape. Continental's fleet utilization was very high, tight, and streamlined, though it could produce long delays as a consequence at times. Not sure what you are talking about as it relates to CO's "awful" reservation system. It was no better or worse than anything else in 2008 and certainly not causing operational issues for legacy CO prior to the merger.

The merger itself was a textbook case in how NOT to merge two airlines. It was a complete mess, poorly executed, thanks to bad leadership on both sides of the aisle. The first signs of trouble were the IT integration, which failed miserably. UA's work force, notably its flight attendants and other front line workers, were coming out of years of labor disputes, having seen their pensions eroded in bankruptcy and UA was never known for customer service culture. CO passed itself off as more customer friendly, and for a time, was the industry's darling. It was very focused on providing "Clean" "Safe", "Reliable" transport and product consistency was a major focus for CO.

Jeff Smisek was the wrong guy to run the merged company. Glenn Tilton succeeded in making some improvements at legacy UA but was desperate to marry it off to anyone willing to merge. Oscar Munoz managed to settle down the labor issues that plagued both companies post-merger, but it is Scott Kirby who is taking UA to a whole new level. UA struggled for years to absorb merger costs, ran an inefficient, merged operation with too many 50 seat regional jets, and not enough market share on domestic routes. It faced a lot of competition from one or more players in each of its hub markets, and had an awful product and reliability and visibly demonstrated its hatred for the flying public, culminating in the David Dao incident, which also marked an inflection point in its renewal.

The Continental of the late 1990s and into the 2000s leading up to the merger was not the CO of the 1980s and early 1990s. It was a profitable, nimble competitor, well liked by many business travelers and came with a key asset: The Newark Hub. It was widely considered the most profitable hub and the crown jewel in the CO network by the time the two airlines merged. Yes, they complimented each other and merging filled many gaps. But you've got a lot of incorrect assumptions about pmCO.

ContinentalEWR wrote:

Jeff Smisek was the wrong guy to run the merged company. Glenn Tilton succeeded in making some improvements at legacy UA but was desperate to marry it off to anyone willing to merge. Oscar Munoz managed to settle down the labor issues that plagued both companies post-merger, but it is Scott Kirby who is taking UA to a whole new level. UA struggled for years to absorb merger costs, ran an inefficient, merged operation with too many 50 seat regional jets, and not enough market share on domestic routes. It faced a lot of competition from one or more players in each of its hub markets, and had an awful product and reliability and visibly demonstrated its hatred for the flying public, culminating in the David Dao incident, which also marked an inflection point in its renewal.

The Continental of the late 1990s and into the 2000s leading up to the merger was not the CO of the 1980s and early 1990s. It was a profitable, nimble competitor, well liked by many business travelers and came with a key asset: The Newark Hub. It was widely considered the most profitable hub and the crown jewel in the CO network by the time the two airlines merged. Yes, they complimented each other and merging filled many gaps. But you've got a lot of incorrect assumptions about pmCO.

My opinion...

There are some kernels of truth here, but to say, "Everything Continental is good, but everything United is bad" is quite a stretch. And this kind of arrogance is exactly why the merger did poorly at first.

Yes, United was emaciated and beaten down by decades of labor strife, bankruptcy, and Tilton. Yet it had sophisticated, scientific, and efficient methodologies, plus experience in more competitive markets.

Yes, Continental ran smoothly in the 90's and 00's, but its beauty was only skin deep - there was no depth to its methods - as was agonizingly obvious when the Continental crew ran the much larger and more complex merged company - badly.

The low point - the Dao incident - resulted from a toxic combination of old Continental's punitive rules-bound culture plus old United's laser focus on no-excuses outcomes.

Kirby has since masterfully harnessed deep set, latent strengths from both cultures while deemphasizing their respective weaknesses. The recent results speak for themselves.

Delta and American should take note. To the extent that Delta is losing key strengths it gained from Northwest since Richard Anderson retired, it risks sinking back into its old insular, slow moving, regional self. To the extent that a cavalier America West management disrespects decades of AA excellence, they defeat themselves.

Instead the most successful mergers find, learn from, and leverage complementary business strengths from each culture. As Delta used to under Anderson. And Kirby is doing now.

n9801f wrote:

Delta and American should take note. To the extent that Delta is losing key strengths it gained from Northwest since Richard Anderson retired, it risks sinking back into its old insular, slow moving, regional self. To the extent that a cavalier America West management disrespects decades of AA excellence, they defeat themselves.

Instead the most successful mergers find, learn from, and leverage complementary business strengths from each culture. As Delta used to under Anderson. And Kirby is doing now.

The market doesn't agree with your assessment that DL has anything to fear from United, or, more broadly, that heavy intercon rotation of shiny 787s to tertiary markets is a particularly winning strategy.

DL market cap $25.4 Billion
UA, $15.3 Billion
AA, $12.6 Billion
WN, $27.8 Billion
AS, $6.6 Billion (and ALK had just 20.3% of UA's Operating Revenue for 2019)

n9801f wrote:

ContinentalEWR wrote:

Jeff Smisek was the wrong guy to run the merged company. Glenn Tilton succeeded in making some improvements at legacy UA but was desperate to marry it off to anyone willing to merge. Oscar Munoz managed to settle down the labor issues that plagued both companies post-merger, but it is Scott Kirby who is taking UA to a whole new level. UA struggled for years to absorb merger costs, ran an inefficient, merged operation with too many 50 seat regional jets, and not enough market share on domestic routes. It faced a lot of competition from one or more players in each of its hub markets, and had an awful product and reliability and visibly demonstrated its hatred for the flying public, culminating in the David Dao incident, which also marked an inflection point in its renewal.

The Continental of the late 1990s and into the 2000s leading up to the merger was not the CO of the 1980s and early 1990s. It was a profitable, nimble competitor, well liked by many business travelers and came with a key asset: The Newark Hub. It was widely considered the most profitable hub and the crown jewel in the CO network by the time the two airlines merged. Yes, they complimented each other and merging filled many gaps. But you've got a lot of incorrect assumptions about pmCO.

My opinion...

There are some kernels of truth here, but to say, "Everything Continental is good, but everything United is bad" is quite a stretch. And this kind of arrogance is exactly why the merger did poorly at first.

Yes, United was emaciated and beaten down by decades of labor strife, bankruptcy, and Tilton. Yet it had sophisticated, scientific, and efficient methodologies, plus experience in more competitive markets.

Yes, Continental ran smoothly in the 90's and 00's, but its beauty was only skin deep - there was no depth to its methods - as was agonizingly obvious when the Continental crew ran the much larger and more complex merged company - badly.

The low point - the Dao incident - resulted from a toxic combination of old Continental's punitive rules-bound culture plus old United's laser focus on no-excuses outcomes.

Kirby has since masterfully harnessed deep set, latent strengths from both cultures while deemphasizing their respective weaknesses. The recent results speak for themselves.

Delta and American should take note. To the extent that Delta is losing key strengths it gained from Northwest since Richard Anderson retired, it risks sinking back into its old insular, slow moving, regional self. To the extent that a cavalier America West management disrespects decades of AA excellence, they defeat themselves.

Instead the most successful mergers find, learn from, and leverage complementary business strengths from each culture. As Delta used to under Anderson. And Kirby is doing now.

No one said everything CO did was great, and everything UA did was bad. The end result is that the wrong folks from both companies ended up stewarding the merger through its first few years. UA had a much more developed network in some markets, notably to Asia, in the West, and throughout the Midwest. It was weak in the northeast and in the southeast, and numerous costly "airline within an airline" adventures from "Shuttle By United", which was renamed "United Shuttle", and "Ted" did not help its domestic network grow. To say there was no depth to CO's methods is a step too far. It was run very competently, and competitively from Gordon Bethune until and through Larry Kellner's tenure. Then things began to change, under Smisek, and when the company was facing headwinds. It was Smisek who tried to make CO like everyone else, and we all know what happened after that. Continental and its management were not seasoned in merging companies together. DL and NW had a layup and a strong one, as their CEO's each had some intimate knowledge of the other's operation. That was not the case with UA and CO, which was a marriage of convenience and necessity.

American does need to borrow a few pages from the playbooks of both Delta and United in terms of changing the narrative on its customer facing services. Delta is facing many headwinds (so is the entire industry). It is very challenged in TPAC, though a lot of that is pandemic induced, but it remains a formidable competitor and still excels in operations relative to AA and UA, and has some natural advantages, like dominating most of its hub markets (ATL, DTW, MSP, SLC). To say Delta is "sinking back into its old, slow-moving, regional self" is very much an exaggeration. American's pre-merger management team were, it could be argued, deeply incompetent, out of touch, and lost grasp of the airline's direction, driving it further and further away from the industry bell weather it once was. It resisted the opportunity to restructure its finances post-9/11 which would have given it much lower operating costs (something NW and DL certainly did, perhaps in a quasi-collusional way in 2005 when they both filed). American's products were outdated, its fleet was old, and its network was too heavily reliant in Latin America, Heathrow, and Narita. The merger of AA/US was again, one of necessity. AA would not have managed on its own, and neither would US. The management team in place at AA today deserves a lot of the criticism it gets, but in the end, it was the one who took over from US, merged it with HP, and turned US around from the brink of liquidation to a much stronger competitor. AA and US executed largely a flawless merger, had minimal operational issues as a consequence of it. The problem is the parochial mindset of the HP crowd doesn't work for a global airline like AA.

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

They were never liquidating post BK. You can’t remove all your debt and obligations in a Chapter 11. UA was profitable in the 3 quarters of 2006 after the BK (they exited February 1) and FY 2007. The biggest problem that affected everyone just a few years later was oil shooting up to over $150/ barrel and the economy collapsing to its worst levels in 70 years.

It was also Jeff Smisek who initiated the merger talks with UA and who also had tons of debt obligations coming up in 2011 and beyond. Smisek was a massive snob and terrible person, but also not dumb enough to realize the realities of what lied ahead for him if he wasn’t able to merge with United.

MIflyer12 wrote:

The market doesn't agree with your assessment that DL has anything to fear from United, or, more broadly, that heavy intercon rotation of shiny 787s to tertiary markets is a particularly winning strategy.

DL market cap $25.4 Billion
UA, $15.3 Billion
AA, $12.6 Billion
WN, $27.8 Billion
AS, $6.6 Billion (and ALK had just 20.3% of UA's Operating Revenue for 2019)

As I suspect you know very well, "Past performance is no guarantee of future returns." These valuations are influenced by lagging perceptions.

Covid is a whole new ballgame. This is not a good time to rest on one's past laurels. United alone has taken the approach of preparing for any eventuality.

The merger with CO was a mess because it was CO management running everything into the ground. By the way, why isn’t Jeff Smisek in jail?

N1120A wrote:

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

Why was Tilton determined to retire the 737-500s so early?

ContinentalEWR wrote:

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

Not sure that is entirely true. UA set itself up for higher costs pre-9/11 and its network weaknesses were fully exposed when the pre-9/11 planned US/UA merger was under consideration. UA emerged from 9/11 with many problems lacking solutions. The network was still a problem, dispatch reliability was poor, thanks to a lot of deferred maintenance, and the product was just so. They did roll out the lie flat beds in United Business, but beyond that, everything Tilton was focused on pointed to merging with someone. Anyone. The merger with CO was an absolute mess. Poorly executed, done on the cheap and the folks that ran CO were seen as more seasoned at that but not so great at taking on so many challenges at once.

Did any of the 747-200s get the lie flat business seats? Why did Tilton decide to sell the remaining 747-200s in 2002?

blacksoviet wrote:

N1120A wrote:

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

Why was Tilton hell bent on retiring the 737-500s so early?

Because it had terrible CASM. When oil prices sky rocketed they made the choice to dump the 30 they had left in 2008 before they then retired the 733s as well. I liked those planes and hated losing so much mainline but people forget that every airline was making huge cuts too. CO retired their 733s and most 735s around that time too. NW/DL retired D93s/D94s and AA retired MD-80s. They should've pushed up the 42 319s/320s they still had on order.

What gets lost here is that UA did infact put a RFP in 2009 for widebody & narrowbody aircraft in hopes of a winner take all order. The proposals they got were so good they decided to split the order with both Boeing and Airbus for 787s and A350s (25 each with 25 options) and then put out a separate RFP for the narrrowbody order in spring 2010. Then the merger happened which pushed that back then Jeffy decided for more microwaved leftovers 737s.

blacksoviet wrote:

ContinentalEWR wrote:

Max Q wrote:

United spent longer in bankruptcy than any other US airline, despite that they did not manage the CH 11 process well and emerged still carrying a lot of debt, their survival was very much in question


Their financial performance post bankruptcy was not impressive and without the lifeline of the merger with Continental they may well have liquidated

Not sure that is entirely true. UA set itself up for higher costs pre-9/11 and its network weaknesses were fully exposed when the pre-9/11 planned US/UA merger was under consideration. UA emerged from 9/11 with many problems lacking solutions. The network was still a problem, dispatch reliability was poor, thanks to a lot of deferred maintenance, and the product was just so. They did roll out the lie flat beds in United Business, but beyond that, everything Tilton was focused on pointed to merging with someone. Anyone. The merger with CO was an absolute mess. Poorly executed, done on the cheap and the folks that ran CO were seen as more seasoned at that but not so great at taking on so many challenges at once.

Did any of the 747-200s get the lie flat business seats? Why did Tilton decide to sell the remaining 747-200s in 2002?

The Suite Dreams IPTE United Business seats came out in 2007 on the 763. The 742s were retired before 9/11 and before Glenn Tilton.

Wow. I didn’t think this thread would pick back up. I did some more reading and I think that UA dodged a bullet by not merging with US. Just look at what happened to AA with the TWA acquisition.

ContinentalEWR wrote:

n9801f wrote:

ContinentalEWR wrote:

Jeff Smisek was the wrong guy to run the merged company. Glenn Tilton succeeded in making some improvements at legacy UA but was desperate to marry it off to anyone willing to merge. Oscar Munoz managed to settle down the labor issues that plagued both companies post-merger, but it is Scott Kirby who is taking UA to a whole new level. UA struggled for years to absorb merger costs, ran an inefficient, merged operation with too many 50 seat regional jets, and not enough market share on domestic routes. It faced a lot of competition from one or more players in each of its hub markets, and had an awful product and reliability and visibly demonstrated its hatred for the flying public, culminating in the David Dao incident, which also marked an inflection point in its renewal.

The Continental of the late 1990s and into the 2000s leading up to the merger was not the CO of the 1980s and early 1990s. It was a profitable, nimble competitor, well liked by many business travelers and came with a key asset: The Newark Hub. It was widely considered the most profitable hub and the crown jewel in the CO network by the time the two airlines merged. Yes, they complimented each other and merging filled many gaps. But you've got a lot of incorrect assumptions about pmCO.

My opinion...

There are some kernels of truth here, but to say, "Everything Continental is good, but everything United is bad" is quite a stretch. And this kind of arrogance is exactly why the merger did poorly at first.

Yes, United was emaciated and beaten down by decades of labor strife, bankruptcy, and Tilton. Yet it had sophisticated, scientific, and efficient methodologies, plus experience in more competitive markets.

Yes, Continental ran smoothly in the 90's and 00's, but its beauty was only skin deep - there was no depth to its methods - as was agonizingly obvious when the Continental crew ran the much larger and more complex merged company - badly.

The low point - the Dao incident - resulted from a toxic combination of old Continental's punitive rules-bound culture plus old United's laser focus on no-excuses outcomes.

Kirby has since masterfully harnessed deep set, latent strengths from both cultures while deemphasizing their respective weaknesses. The recent results speak for themselves.

Delta and American should take note. To the extent that Delta is losing key strengths it gained from Northwest since Richard Anderson retired, it risks sinking back into its old insular, slow moving, regional self. To the extent that a cavalier America West management disrespects decades of AA excellence, they defeat themselves.

Instead the most successful mergers find, learn from, and leverage complementary business strengths from each culture. As Delta used to under Anderson. And Kirby is doing now.

No one said everything CO did was great, and everything UA did was bad. The end result is that the wrong folks from both companies ended up stewarding the merger through its first few years. UA had a much more developed network in some markets, notably to Asia, in the West, and throughout the Midwest. It was weak in the northeast and in the southeast, and numerous costly "airline within an airline" adventures from "Shuttle By United", which was renamed "United Shuttle", and "Ted" did not help its domestic network grow. To say there was no depth to CO's methods is a step too far. It was run very competently, and competitively from Gordon Bethune until and through Larry Kellner's tenure. Then things began to change, under Smisek, and when the company was facing headwinds. It was Smisek who tried to make CO like everyone else, and we all know what happened after that. Continental and its management were not seasoned in merging companies together. DL and NW had a layup and a strong one, as their CEO's each had some intimate knowledge of the other's operation. That was not the case with UA and CO, which was a marriage of convenience and necessity.

American does need to borrow a few pages from the playbooks of both Delta and United in terms of changing the narrative on its customer facing services. Delta is facing many headwinds (so is the entire industry). It is very challenged in TPAC, though a lot of that is pandemic induced, but it remains a formidable competitor and still excels in operations relative to AA and UA, and has some natural advantages, like dominating most of its hub markets (ATL, DTW, MSP, SLC). To say Delta is "sinking back into its old, slow-moving, regional self" is very much an exaggeration. American's pre-merger management team were, it could be argued, deeply incompetent, out of touch, and lost grasp of the airline's direction, driving it further and further away from the industry bell weather it once was. It resisted the opportunity to restructure its finances post-9/11 which would have given it much lower operating costs (something NW and DL certainly did, perhaps in a quasi-collusional way in 2005 when they both filed). American's products were outdated, its fleet was old, and its network was too heavily reliant in Latin America, Heathrow, and Narita. The merger of AA/US was again, one of necessity. AA would not have managed on its own, and neither would US. The management team in place at AA today deserves a lot of the criticism it gets, but in the end, it was the one who took over from US, merged it with HP, and turned US around from the brink of liquidation to a much stronger competitor. AA and US executed largely a flawless merger, had minimal operational issues as a consequence of it. The problem is the parochial mindset of the HP crowd doesn't work for a global airline like AA.

The AA/US merger was of necessity for US, not AA. Tom Horton was installed as CEO to take AA thru bankruptcy prior to the US takeover. The bankruptcy exit strategy was well received by AA shareholders and would have allowed AA to compete better against DL and UA. The Horton team introduced new seats, IFE and an onboard experience that was very competitive to DL. The US team came in making promises with the AA unions and throwing propaganda at the creditors to convince them that the merger was good and that Doug Parker would be a better leader than Horton.

Wow, it's been a while since we've seen some PMUA vs. PMCO mudslinging on here, hah. I'm glad that we've mostly stopped doing that, and it seems like the now-united airline has too.

I'm just so glad UA finally has its house in order. As a longtime UA flyer, it is such a relief and a pleasant experience to fly UA these days. It's a pretty consistent experience and a far more reliable operation than it was five years ago. I've never felt more confident and proud to have UA as my airline of choice.

Sancho99504 wrote:

ContinentalEWR wrote:

n9801f wrote:

My opinion...

There are some kernels of truth here, but to say, "Everything Continental is good, but everything United is bad" is quite a stretch. And this kind of arrogance is exactly why the merger did poorly at first.

Yes, United was emaciated and beaten down by decades of labor strife, bankruptcy, and Tilton. Yet it had sophisticated, scientific, and efficient methodologies, plus experience in more competitive markets.

Yes, Continental ran smoothly in the 90's and 00's, but its beauty was only skin deep - there was no depth to its methods - as was agonizingly obvious when the Continental crew ran the much larger and more complex merged company - badly.

The low point - the Dao incident - resulted from a toxic combination of old Continental's punitive rules-bound culture plus old United's laser focus on no-excuses outcomes.

Kirby has since masterfully harnessed deep set, latent strengths from both cultures while deemphasizing their respective weaknesses. The recent results speak for themselves.

Delta and American should take note. To the extent that Delta is losing key strengths it gained from Northwest since Richard Anderson retired, it risks sinking back into its old insular, slow moving, regional self. To the extent that a cavalier America West management disrespects decades of AA excellence, they defeat themselves.

Instead the most successful mergers find, learn from, and leverage complementary business strengths from each culture. As Delta used to under Anderson. And Kirby is doing now.

No one said everything CO did was great, and everything UA did was bad. The end result is that the wrong folks from both companies ended up stewarding the merger through its first few years. UA had a much more developed network in some markets, notably to Asia, in the West, and throughout the Midwest. It was weak in the northeast and in the southeast, and numerous costly "airline within an airline" adventures from "Shuttle By United", which was renamed "United Shuttle", and "Ted" did not help its domestic network grow. To say there was no depth to CO's methods is a step too far. It was run very competently, and competitively from Gordon Bethune until and through Larry Kellner's tenure. Then things began to change, under Smisek, and when the company was facing headwinds. It was Smisek who tried to make CO like everyone else, and we all know what happened after that. Continental and its management were not seasoned in merging companies together. DL and NW had a layup and a strong one, as their CEO's each had some intimate knowledge of the other's operation. That was not the case with UA and CO, which was a marriage of convenience and necessity.

American does need to borrow a few pages from the playbooks of both Delta and United in terms of changing the narrative on its customer facing services. Delta is facing many headwinds (so is the entire industry). It is very challenged in TPAC, though a lot of that is pandemic induced, but it remains a formidable competitor and still excels in operations relative to AA and UA, and has some natural advantages, like dominating most of its hub markets (ATL, DTW, MSP, SLC). To say Delta is "sinking back into its old, slow-moving, regional self" is very much an exaggeration. American's pre-merger management team were, it could be argued, deeply incompetent, out of touch, and lost grasp of the airline's direction, driving it further and further away from the industry bell weather it once was. It resisted the opportunity to restructure its finances post-9/11 which would have given it much lower operating costs (something NW and DL certainly did, perhaps in a quasi-collusional way in 2005 when they both filed). American's products were outdated, its fleet was old, and its network was too heavily reliant in Latin America, Heathrow, and Narita. The merger of AA/US was again, one of necessity. AA would not have managed on its own, and neither would US. The management team in place at AA today deserves a lot of the criticism it gets, but in the end, it was the one who took over from US, merged it with HP, and turned US around from the brink of liquidation to a much stronger competitor. AA and US executed largely a flawless merger, had minimal operational issues as a consequence of it. The problem is the parochial mindset of the HP crowd doesn't work for a global airline like AA.

The AA/US merger was of necessity for US, not AA. Tom Horton was installed as CEO to take AA thru bankruptcy prior to the US takeover. The bankruptcy exit strategy was well received by AA shareholders and would have allowed AA to compete better against DL and UA. The Horton team introduced new seats, IFE and an onboard experience that was very competitive to DL. The US team came in making promises with the AA unions and throwing propaganda at the creditors to convince them that the merger was good and that Doug Parker would be a better leader than Horton.

AA emerged with an improved cost structure post-Chapter 11, though it quickly took on a substantial amount of debt tied to renewing its fleet (something it had to do), but AA as a stand alone carrier would have struggled post-consolidation. It would have had to cling to the "cornerstone" hub strategy (DFW, ORD, MIA, LAX, JFK) and would have struggled even more in the Northeast and East Coast generally. You could argue the AS and B6 tie ups would have shored up a lot, but they would have come years after DL and UA got much, much bigger. I'm not sure how much Horton introduced as far as on board product was truly competitive to Delta (yes, on the international premium cabin front). As to US, it was the carrier no one wanted to merge with, ever, going back a decade. The HP/US merger saved US from a very likely liquidation and brought in a better management team, but prior to that, a UA/US merger looked great on paper, but would have been a balance sheet and operating cost nightmare. DL skillfully avoided that insane, aggressive attempt by US to buy it into a merger, and wasn't it one of the AA/US c-suite folks themselves who said US wasn't the prettiest, but it was the last. US gave AA two key assets: the CLT hub and a fleet with which to grow domestic capacity.

UA444 wrote:

blacksoviet wrote:

N1120A wrote:

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

Why was Tilton hell bent on retiring the 737-500s so early?

Because it had terrible CASM. When oil prices sky rocketed they made the choice to dump the 30 they had left in 2008 before they then retired the 733s as well. I liked those planes and hated losing so much mainline but people forget that every airline was making huge cuts too. CO retired their 733s and most 735s around that time too. NW/DL retired D93s/D94s and AA retired MD-80s. They should've pushed up the 42 319s/320s they still had on order.

What gets lost here is that UA did infact put a RFP in 2009 for widebody & narrowbody aircraft in hopes of a winner take all order. The proposals they got were so good they decided to split the order with both Boeing and Airbus for 787s and A350s (25 each with 25 options) and then put out a separate RFP for the narrrowbody order in spring 2010. Then the merger happened which pushed that back then Jeffy decided for more microwaved leftovers 737s.

There was nothing wrong with the CASM of the paid for United 737s. Continental's problem with their 737 Classics was that they were on horrible lease terms. DL and AA retired the aircraft you mention a decade after United retired newer airplanes that were even more crucial to their domestic network. Apples and Oranges.

UA444 wrote:

blacksoviet wrote:

N1120A wrote:

Neither United nor Continental were in particularly good shape when the merger happened, though United had the ability survive without merging - Continental didn't. Continental had a very limited long haul fleet that was hamstrung by less than favorable lease rates due to their earlier financial problems and poor cash reserves. United emerged with over $3 billion in cash and a massive widebody fleet. If Tilton hadn't retired their rather young 737 Classic fleet, which was still quite efficient for the missions assigned, they could have maintained a solid domestic network to feed their long haul. Continental shined at having extremely efficient fleet utilization and streamlined back end processes, though they were still not helped by having an AWFUL reservations system. The reality is, however, that those two airlines really complimented each other from a network perspective and their merger made a ton of sense. The problem is that they handled the merger terribly and picked a lot of what was wrong with each to run with. American took full advantage by poaching a bunch of their FFers too. It wasn't until Munoz came in to fix corporate culture and Kirby then continued to make the airline a much better experience that the new United really improved.

Why was Tilton hell bent on retiring the 737-500s so early?

Because it had terrible CASM. When oil prices sky rocketed they made the choice to dump the 30 they had left in 2008 before they then retired the 733s as well. I liked those planes and hated losing so much mainline but people forget that every airline was making huge cuts too. CO retired their 733s and most 735s around that time too. NW/DL retired D93s/D94s and AA retired MD-80s. They should've pushed up the 42 319s/320s they still had on order.

What gets lost here is that UA did infact put a RFP in 2009 for widebody & narrowbody aircraft in hopes of a winner take all order. The proposals they got were so good they decided to split the order with both Boeing and Airbus for 787s and A350s (25 each with 25 options) and then put out a separate RFP for the narrrowbody order in spring 2010. Then the merger happened which pushed that back then Jeffy decided for more microwaved leftovers 737s.

Wait a minute, CO had there 733s and 735s around much longer than UA kept their 733/735s.

bigb wrote:

UA444 wrote:

blacksoviet wrote:

Why was Tilton hell bent on retiring the 737-500s so early?

Because it had terrible CASM. When oil prices sky rocketed they made the choice to dump the 30 they had left in 2008 before they then retired the 733s as well. I liked those planes and hated losing so much mainline but people forget that every airline was making huge cuts too. CO retired their 733s and most 735s around that time too. NW/DL retired D93s/D94s and AA retired MD-80s. They should've pushed up the 42 319s/320s they still had on order.

What gets lost here is that UA did infact put a RFP in 2009 for widebody & narrowbody aircraft in hopes of a winner take all order. The proposals they got were so good they decided to split the order with both Boeing and Airbus for 787s and A350s (25 each with 25 options) and then put out a separate RFP for the narrrowbody order in spring 2010. Then the merger happened which pushed that back then Jeffy decided for more microwaved leftovers 737s.

Wait a minute, CO had there 733s and 735s around much longer than UA kept their 733/735s.

Many United 737-500s were retired when they were 12 years old. The rest were retired when they were 17 or 18. By the end of 2009 they were gone.

bigb wrote:

UA444 wrote:

blacksoviet wrote:

Why was Tilton hell bent on retiring the 737-500s so early?

Because it had terrible CASM. When oil prices sky rocketed they made the choice to dump the 30 they had left in 2008 before they then retired the 733s as well. I liked those planes and hated losing so much mainline but people forget that every airline was making huge cuts too. CO retired their 733s and most 735s around that time too. NW/DL retired D93s/D94s and AA retired MD-80s. They should've pushed up the 42 319s/320s they still had on order.

What gets lost here is that UA did infact put a RFP in 2009 for widebody & narrowbody aircraft in hopes of a winner take all order. The proposals they got were so good they decided to split the order with both Boeing and Airbus for 787s and A350s (25 each with 25 options) and then put out a separate RFP for the narrrowbody order in spring 2010. Then the merger happened which pushed that back then Jeffy decided for more microwaved leftovers 737s.

Wait a minute, CO had there 733s and 735s around much longer than UA kept their 733/735s.

True. The 733s were retired right before the merger (or immediately after, IMO none had UNITED on them). The 735 lasted a little while after the merger.