One hour ago, Continental Airlines and United Airlines Announce Comprehensive Plan for Global Cooperation; Continental Plans to Join Star Alliance. There will much to learn about this one as it goes forward, but this is one interesting combination with a myriad of strategic and tactical opportunities.
Last month I wrote about the possibility of a United – Continental combination in Swelblog.com: Pondering the Next Move; But Before I Do…….. The piece was written as United – US Airways possibilities were being thrown about. Then the idea of a United – Continental alliance was being tossed about. I wrote a couple of paragraphs where I contrasted these combinations with the Delta – Northwest combination that is on the table. And I wrote……
My guess is Jim “Hell NO”berstar is keeping his powder dry until the next move is announced. The next move will face more intense scrutiny based on the “I told you so” line that was most prevalent yesterday. Honestly, I do not know of another deal scenario that is interesting – let alone transformational – and provides the kind of investment thesis that helps this period come alive.We have United and US Airways merger discussions being tossed around by “those close to the situation”.
Now we have a United and Continental alliance in the news. Readers know I like what Tilton says as he talks about the industry from 40,000 feet – and I am in fundamental agreement that the current construct is good for no stakeholder group.
If I lean to one of the two scenarios being painted in today’s mainstream press, I lean to a United - Continental alliance. Gravity takes me there because it differentiates the combination from Delta and Northwest. Delta and Northwest individually, and collectively, are/will be highly reliant on connecting traffic as their hubs are located in smaller population centers. [And this is why their commitment to maintaining the most extensive network possible is absolutely factual] United and Continental would be building around hubs/gateways where core onboard traffic would be largely local.
I for one look forward to hearing more about this combination.
More to come.