What If UA And CO Split?

molitvic20 · Sat Mar 08, 2014 7:44 pm

As a pilot, I was talking to one of my FA's about the merger with United and Continental. Rumor has it, Continental wants out.
I mean this could be true, they still have two separate contracts. Could this really happen if they wanted to, especially after investing so much time and money combining the two airlines?

FlyHossD · Sat Mar 08, 2014 7:47 pm

Quoting molitvic20 (Thread starter):
Rumor has it, Continental wants out.

No way, no how. Rumors from crew members are notoriously unreliable.

It is true, though, that the sUA and sCO Inflight groups have different priorities and are far from a joint contract. How long will this last? I don't know, but I'd guess it will last until the company makes it a priority.

A couple more thoughts - how would a division be done anyway? Continental was the surviving corporation - renamed United - with Continental's Airline Operating Certificate and United's Maintenance Certificate and that's just for starters. It would be a mess to "unwind."

[Edited 2014-03-08 11:50:23]

MIflyer12 · Sat Mar 08, 2014 7:54 pm

Quoting molitvic20 (Thread starter):
Rumor has it, Continental wants out.

There is no Continental with separate ownership or management. 'Continental wants out' is a delusional fantasy of disgruntled workers or work groups.

MaverickM11 · Sat Mar 08, 2014 8:01 pm

What if Oklahoma splits from the US? That is probably more likely...

nutsaboutplanes · Sat Mar 08, 2014 8:11 pm

The bottom line is that you CAN run an airline with divided labor groups.....in some ways it benefits the bottom line and it others it doesnt because you lose efficiency in routing and scheduling. That said, everyone would agree (I hope) that a unified company is the best alternative.

United will be fine, they can manage through this and they will succeed even if division exist from within.....just ask US Airways

COSPN · Sat Mar 08, 2014 8:14 pm

Lots of Texans want to be a republic again but not gonna happen

nws2002 · Sat Mar 08, 2014 8:17 pm

I work as a FA for sCO and I can't see this ever happening, no way. Sure the sUA and sCO FA workgroups are pretty far apart on what we want in a contract, but that doesn't mean management wants to operate two separate brands. After all the work they've put into the merger it would be nearly impossible to break it all apart now.

SEPilot · Sat Mar 08, 2014 8:23 pm

Quoting MIflyer12 (Reply 2):

There is no Continental with separate ownership or management. 'Continental wants out' is a delusional fantasy of disgruntled workers or work groups.

You can't unscramble eggs. United and Continental are truly well scrambled by now. And with the current climate they could not survive on their own. I have been seeing the necessity for mergers for at least a decade; I think three large carriers can survive and do well (along with WN and B6), but more than that will just result in cutthroat competition that will drive everyone into bankruptcy again. I do not know any other industry that must remain US based where EVERY major player has been through bankruptcy at least once.

ASA · Sat Mar 08, 2014 9:04 pm

Quoting MaverickM11 (Reply 3):
What if Oklahoma splits from the US? That is probably more likely...

Quoting COSPN (Reply 5):

Lots of Texans want to be a republic again but not gonna happen

I say, offer Florida to get out of the union before the next election ...

SonomaFlyer · Sat Mar 08, 2014 9:27 pm

This is the dumbest rumor I've heard in a while. UCH has spent billions on what has been a nightmare merger process. The nightmare was mostly self-inflicted by poor planning by management. They had examples from the DL merger to emulate but chose to do the less planning and less investing in the process the better plan. It didn't work well.

The various groups are pissed because mgt has been slow to get the joint contracts negotiated which slows integration and complicates things immensely. I'm frankly surprised the BoD or the shareholders haven't gone postal. DL has made $4 profit for every $1 made by UA. This despite UA's larger size and greater overall revenue. Given how far down the road we've come time-wise since the "merger," you can't blame anyone but management despite they will blame anything and anyone except themselves.

UA employees are right to be pissed. They've been let down.

bobnwa · Sat Mar 08, 2014 9:27 pm

Why not expand the question to NW/DL and AA/US and WN/AirTran?

charlienorth · Sat Mar 08, 2014 11:06 pm

Quoting SonomaFlyer (Reply 9):
UA employees are right to be pissed. They've been let down

Damn right...not impressed by our partner..it's a step backwards, welcome to the 70's.

PacNWjet · Sat Mar 08, 2014 11:30 pm

While it is relatively common in the business world for large corporations to spin off business units as separate companies, this would seem rather unlikely in the airline industry or in any other industry for that matter in which a company provides one service or one product. Moreover, mergers are very common in the airline industry but I am having a hard time thinking of airlines that have split into separate corporate units with new ownership. Maybe others can think of instances where this has happened but I am having a hard time thinking of one. The closest I can think of is when airlines have created low-cost units that operate separately, but that is not what appears to have been suggested here.

nws2002 · Sun Mar 09, 2014 12:37 am

Quoting PacNWJet (Reply 12):
Moreover, mergers are very common in the airline industry but I am having a hard time thinking of airlines that have split into separate corporate units with new ownership. Maybe others can think of instances where this has happened but I am having a hard time thinking of one.

The only instance I can think of is when regionals create new subsidiaries to operate certain aircraft for a mainline partner, usually to get around a scope clause. Not exactly what you're talking about, but it is the closest thing I can think of.

TonyBurr · Sun Mar 09, 2014 1:26 am

Please CO take SMISEK with you, PLEASE, PLEASE !!!!!

SkyTeamTriStar · Sun Mar 09, 2014 2:16 am

So many of you on this post are forgetting about "the power of the people…"

No matter how far along things are, it can be undone. It might not be an easy thing to do but it can be done.

N505fx · Sun Mar 09, 2014 3:09 am

Tail wagging the dog and the dumbest A.net thing I have ever heard. Work groups don't dictate what the BOD, stockholders and institutional investors do. The merger has merits, management has made mistakes, the only path forward for those who are not pleased are to suck it up or influence the channels that can cause change...all of this extraneous a.net whining is just noise and infantile banter that has no foundation in the reality of how businesses really run....sorry to burt all of your little arm chair airline bubbles.

cle757 · Sun Mar 09, 2014 3:13 am

Quoting n505fx (Reply 16):
Tail wagging the dog and the dumbest A.net thing I have ever heard. Work groups don't dictate what the BOD, stockholders and institutional investors do. The merger has merits, management has made mistakes, the only path forward for those who are not pleased are to suck it up or influence the channels that can cause change...all of this extraneous a.net whining is just noise and infantile banter that has no foundation in the reality of how businesses really run....sorry to burt all of your little arm chair airline bubbles.

Signed, Jeff Smisek

Boeing778X · Sun Mar 09, 2014 3:14 am

No one would be happier than me if that ever did happen. CO was an airline I liked...a lot.

CALTECH · Sun Mar 09, 2014 3:27 am

Quoting Boeing778X (Reply 18):
No one would be happier than me if that ever did happen. CO was an airline I liked...a lot.

Me too. Was very disappointed in our merger partner, very unimpressive. It will not be undone however.

Braniff747SP · Sun Mar 09, 2014 3:43 am

You know, I appreciate the fact that A.net enables the discussion of hypotheticals, however unlikely they may be.

This, however, is simply inane.

airportugal310 · Sun Mar 09, 2014 3:48 am

Quoting cle757 (Reply 17):

What's the matter? Are you mad he is actually correct?

catiii · Sun Mar 09, 2014 3:58 am

Quoting molitvic20 (Thread starter):

What Continental? Continental doesn't exist. There's no separate entity to want out. As an airline pilot, it's shocking that you don't have even this basic understanding of your industry.

Quoting SkyTeamTriStar (Reply 15):

And we've reached a new level of naïveté. "Power of the people?" To breakup a merged company? Oooook...

N505fx · Sun Mar 09, 2014 4:01 am

Quoting CALTECH (Reply 19):
Was very disappointed in our merger partner, very unimpressive

A lot of UA people feel the same...especially after all of the hype about how INCREDIBLE Continental was...but oh well, live and learn...and go back to paper process and living on the cheap the Texas way I guess.

lightsaber · Sun Mar 09, 2014 4:45 am

Wow... undoing it at this point would result in the liquidation of *both* airlines. It is simply too late to untangle the two airlines financially. Where is the return on investment of this hypothetical situation? How would it be untangled? How would CO survive now that the brand has gone dormant so long?

Quoting SonomaFlyer (Reply 9):
This is the dumbest rumor I've heard in a while. UCH has spent billions on what has been a nightmare merger process. The nightmare was mostly self-inflicted by poor planning by management. They had examples from the DL merger to emulate but chose to do the less planning and less investing in the process the better plan. It didn't work well.

I could only imagine how poorly the splitting process would go. I don't even know of a precedence.

And the cost... I've seriously tried to come up with a plan that wouldn't result in the liquidation of *both* units and I'm unable to. Like it or not, UA/CO must go forward as UA to survive.

Someone pro-divesting please explain how a split UA/CO would make more money than a combined airline. For a business plan would be required for a spin off. Any cut in ROI would have to be automatically rejected by the BOD.

Lightsaber

atcsundevil · Sun Mar 09, 2014 5:45 am

If they're too incompetent to merge, then how the hell can they be competent enough to split?

To echo what has been said above, I can also appreciate a good hypothetical, but this just silly. The UA/CO merger has gone anything but swimmingly, but I would consider it no more or less successful than US/HP. At least UA/CO has figured out basic seniority issues despite US/HP having a five year head start.

The current UA management sucks and Jeffy needs to get run over by a bus, but poor management and hitches in the merger will not change the fact that they are a singular entity that cannot and will not be undone. Even if it were physically possible (and I suppose that it is), they'd both go bankrupt in the process, resulting in two horrible companies instead of just one. The end result of a "reverse merger" would be the same as it is now -- there's just no going back to the good old days where both airlines were awesome.

The thoughts and feelings of a subset of employees will have absolutely no impact on the inevitable, so willing things to go back to the way they were before they created this soup sandwich is a complete waste of time.

jetmatt777 · Sun Mar 09, 2014 7:31 am

There is no more Continental to want out.

Shareholders own stock in one company, a lot of work groups are one company, executive staff is one company, board members are one.

As far as decision makers go, there is only one company. There is only one set of decision makers at United.

This is the most ridiculous thing I have ever heard.

I am an ex-Continental agent and I wear that distinction with pride, but let's get this merger finished and start realizing the value of the new company. Rumors like this are a distraction by disgruntled individual workers, nothing more.

CALTECH · Sun Mar 09, 2014 7:45 am

Quoting n505fx (Reply 23):

A lot of UA people feel the same...especially after all of the hype about how INCREDIBLE Continental was...but oh well, live and learn...and go back to paper process and living on the cheap the Texas way I guess.

Same with Continental folks feeling that way too. United was a hollow shell of it's self. Paperless process, have never seen so much paper wasted. Texas versus Illinois, there is a reason why more folks call Texas home rather than Illinois. Chicago can keep it's taxes too.

N505fx · Sun Mar 09, 2014 8:05 am

Quoting CALTECH (Reply 27):
Texas versus Illinois, there is a reason why more folks call Texas home rather than Illinois. Chicago can keep it's taxes too.

I was talking about the way CO cut corners and did things on the cheap and bought sub-par, off-the-shelf solutions, not the difference in cost of living. Oh well, the merged company will figure it out one way or another.

EA CO AS · Sun Mar 09, 2014 8:23 am

Quoting SkyTeamTriStar (Reply 15):
So many of you on this post are forgetting about "the power of the people…"

There are no people anywhere, regardless of money, power or intent, that can do what is being suggested.

Anywhere.

UAL-Fan · Sun Mar 09, 2014 4:57 pm

Remember DaimlerChrysler? I guess the Germans decided they bought themselves a Lemon a few year in. They cast Chrysler off and now its Italian.

BCEaglesCO757 · Sun Mar 09, 2014 5:12 pm

Quoting n505fx (Reply 28):

I would have thought you were speaking of UA and the aircraft upkeep.

what exactly did we do on the cheao and cut corners at CO ?

Seems all the newer and reliable aircraft have been shifted to ORD and SFO. The 73-900's,
the 800's, all the rolls royce powered 57's 200 and 300.

Very unimpressed with the 319/320's. Always something with those aircraft. It has left me
wondering when is the last time sUA received a new airplane ?

Our fleet had been getting younger and younger. sCO was fitting pretty much all of fleet with
DirectTV prior to the merger. Ordering the 787's was also a move in that direction. I wouldn't call it doing things on the cheap or cutting corners.....

BCEaglesCO757 · Sun Mar 09, 2014 5:19 pm

I agree though........dumbest thing I've ever heard. CO is no more and right now there is no going back.

And yes.....CO was INCREDIBLE. Under Bethune and I dare say Larry as well. He said no thanks the
first time around if I recall correctly.

tyler81190 · Sun Mar 09, 2014 5:40 pm

Quoting SEPilot (Reply 7):
You can't unscramble eggs.

You can... It has been don in other industries!

Quoting SkyTeamTriStar (Reply 15):
No matter how far along things are, it can be undone. It might not be an easy thing to do but it can be done.

Quoting EA CO AS (Reply 29):
There are no people anywhere, regardless of money, power or intent, that can do what is being suggested.

The merger, along with all other airline mergers CAN be undone... By the D.O.J

They did it to Bell Telecom many years back, they could always do it again. The kind of un-holy mess that would occur would be 10x worse that what everyone complains about now, but it is ALWAYS possible to be un-merged. The logistics, costs, and sheer time involved make it a next to nothing chance it will happen voluntarily, but it could always be court-ordered.

laca773 · Sun Mar 09, 2014 6:27 pm

It's a shame they didn't think to run each airline separately like KL-AF have done. That would have been the best idea, but that's long gone now.
What needs to happen at UA, and we all know it, a management shakeup needs to take place. All the executive powers in charge need to be terminated, and a new team needs to be brought in, to bring everyone together and unify this sad mess!

Caspian27 · Sun Mar 09, 2014 6:29 pm

This thread perfectly illustrates why nothing is getting done. People are so proud of living in the past rather than the now.

kgaiflyer · Sun Mar 09, 2014 6:45 pm

Quoting tyler81190 (Reply 33):
The merger, along with all other airline mergers CAN be undone... By the D.O.J They did it to Bell Telecom many years back, they could always do it again.

Quoting FlyHossD (Reply 1):
how would a division be done anyway? Continental was the surviving corporation - renamed United - with Continental's Airline Operating Certificate and United's Maintenance Certificate and that's just for starters. It would be a mess to "unwind."

Good point.

The Bell Telephone collective didn't have FAA operating certificates. The merger was gerrymandered in such a way that breaking it up would leave the remaining jetsam and flotsam a **non-airline** by regulatory definition.

NWAROOSTER · Sun Mar 09, 2014 8:19 pm

Quoting UAL-Fan (Reply 30):

Remember DaimlerChrysler? I guess the Germans decided they bought themselves a Lemon a few year in. They cast Chrysler off and now its Italian.

The Germans bought Chrysler because they wanted the Jeep brand which Chrysler got when they bought American Motors and ultimately folded American Motors and kept the Jeep name. The Germans were stuck with the whole rotten mess they got themselves into. The Italians bought Chrysler so they could bring FIAT back to the United States.
I don't know who was dumber, the Germans or the Italians. At least the Germans don't have Chrysler any more.

Polot · Sun Mar 09, 2014 8:40 pm

Quoting kgaiflyer (Reply 36):

The Bell Telephone collective didn't have FAA operating certificates.

Bell was also a collection of different companies, so breaking it apart was much easier. UA/CO is now one airline operating under one certificate, so breaking it up would be much more difficult.

Quoting NWAROOSTER (Reply 37):

The Germans bought Chrysler because they wanted the Jeep brand which Chrysler got when they bought American Motors and ultimately folded American Motors and kept the Jeep name. The Germans were stuck with the whole rotten mess they got themselves into.

Daimler created the mess themselves. They bought Chrysler because at the time they (Chrysler) was profitable and sitting on a pile of cash but Daimler had no clue on how to operate in the mainstream US market so Chrysler went down the toilet.

phlwok · Mon Mar 10, 2014 12:15 am

And, importantly, Daimler largely operated Chrysler as a subsidiary making divestiture much easier, rather then integrating it into the overall corporation.

N505fx · Mon Mar 10, 2014 12:16 am

Quoting BCEaglesCO757 (Reply 31):
what exactly did we do on the cheao and cut corners at CO ?

IT systems, maintenance systems, off-the-shelf training...all lowest common denominator. Look at the steps back in IT infrastructure United has taken just to "align" systems with Continental so the company as a whole can "move forward"...SHARES anyone?

nws2002 · Mon Mar 10, 2014 12:55 am

Quoting n505fx (Reply 40):
Look at the steps back in IT infrastructure United has taken just to "align" systems with Continental so the company as a whole can "move forward"...SHARES anyone?

That is not really fair. sUA did almost everything on the Apollo mainframe, meaning any system changes had to go through Travelport (and be paid for) and could not be accomplished in house. sCO had moved many functions away from the SHARES mainframe, and instead operated mostly on modern server architecture, that then batched to SHARES. This enabled CO to develop things in-house without paying an outside party for maintenance.

I'm not saying SHARES is perfect, or that the integration has gone smoothly, we all know it hasn't. However, SHARES seems like a convenient dumping ground for many complaints at the company when in fact most of the functions outside of passenger reservations have very little to do with SHARES directly. The blame should really go on the IT integration team.

175erj · Mon Mar 10, 2014 12:57 am

I guess to the original question... it couldn't be much worse than it is today. United seems to be going backwards. Smisek and his cronies like to tout advancements and progress. I haven't seen any noticeable differences. From network/route planning to customer service its just a total disaster.

BCEaglesCO757 · Mon Mar 10, 2014 2:00 am

Quoting laca773 (Reply 34):

Can't speak for my fellow sCO coworkers, but sometimes it's shocking. Namely because Smisek was hired by Bethune and his style is such a departure from the CO that Bethune built up.

maintenance wise we were real big on fleet commonality. All boeing fleet. Again, shedding alot of older aircraft
for new planes, and installing winglets on ALL the narrowbodies. Our completion factors used to be near stellar.
And we got some of the best utilization out of our widebodies. I can't speak on maintenance too much, but I know CALTECH and his department do good work.

All in all Smisek is doing everyone an injustice as the combined carrier should be blowing DL out of the water.

[Edited 2014-03-09 19:09:18]

MaverickM11 · Mon Mar 10, 2014 2:02 am

Quoting 175erj (Reply 42):
it couldn't be much worse than it is today.

The profitability/customer service stats are higher than probably any time in the last decade (ever?) for UA.

Quoting nws2002 (Reply 41):
sUA did almost everything on the Apollo mainframe, meaning any system changes had to go through Travelport (and be paid for) and could not be accomplished in house

...which sUA was trying to bin anyway for Amadeus

DeltaMD90 · Mon Mar 10, 2014 2:09 am

That's like saying TWA wants to get out of AA. It would be a disaster "unmerging" them

SonomaFlyer · Mon Mar 10, 2014 2:27 am

Quoting MaverickM11 (Reply 44):
The profitability/customer service stats are higher than probably any time in the last decade (ever?) for UA.

That's nice, however they've done poorly compared to their main competition (given AA was in bankruptcy) which is DL. Unfortunately for UA, DL's profit was 4x that of UA even though UA pulled in more revenue overall. That means UA isn't doing what its supposed to be doing. That is directly traceable to how management decided to play this merger and how they decided to set up their cost structure.

The fact the stats are higher isn't meaningful if the competition is running circles around them in the only way it counts which is profit.

VS11 · Mon Mar 10, 2014 3:35 am

While one could conceive a way to create two new airlines out of the current United, the collective resources that would be spent on that goal could really be spent to just improve the current airline. Everyone should remember that consolidation was the reason that brought the two companies together, and in the current industry environment having two new independent carriers is not going to help either of them. So ultimately the bigger picture has to be kept in mind but maybe leadership change might be in order. Looking at how far ahead Delta is and how quickly the AA/US integration is going, United is definitely missing something.

indcwby · Mon Mar 10, 2014 4:14 am

Quoting COSPN (Reply 5):
Lots of Texans want to be a republic again but not gonna happen

Lots of Texans also want Continental back too.

MaverickM11 · Mon Mar 10, 2014 4:16 am

Quoting SonomaFlyer (Reply 46):
That's nice, however they've done poorly compared to their main competition (given AA was in bankruptcy) which is DL

No question DL is running a better airline. However, the endless paroxysms of biblical proportions over the challenges of the UA merger are not based on financial performance (or actual data, generally), but memories of things that never were, or a polar vortex cancellation, or an upgrade that didn't clear, or a gate agent that didn't smile long enough...

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