Back to the main theme, as you pointed out the management team at CO is exponentially smarter and more cohesive than the executive team at UA. Much like Lufthansa has been doing for years CO will pick UA’s pockets in the codeshare. Once you standardize schedules, fares, frequent flyer programs and lounge access the only point of differentiation left is the onboard product and service. All the high end traffic will pick CO metal to fly on when they can because of the better product. UA will be left to collect the leftovers. In the end the economics depend on the pro-rate agreement but rest assured CO will outflank UA and pick up disproportionate value. The playbook already exists.

And the asset base is also worn down – much like the PanAm Far East assets that UAL purchased in the mid 1980’s.

I think that the smart thing to do would be to try to heavily code share in international markets – to reduce flying.

I thought that CAL could not get out of their current alliance until at least 9 months after the DAL/NWA deal is consummated – likely alliance withdrawl time late 2009.

Think of what the US airline ownership would be like without the current foreign investment restrictions.(Low market valuations – cheap prices.)

You should start a pool on who is next into bankruptcy.

Mesa
Pinncle
US Air
UAL
DAL
NWA
AMR

And wasn’t it Continental years ago that had the “We really move our tails for you,” commerical?

Rob

They hire good people, train them well, focus them on the customers and their fellow employees, and treat them well (employee events, parties after weekend off-site training sessions, and decent stock options).

And their management – including senior management – lead by example.

They have also never furloughed employees or cut wages (with exception of the first two years when
Braniff and American tried to use the Texas court system to run them out of Texas).

Continental has emulated a number of these activities – employee bonuses based on activities that retain customers (on-time performance, baggage issues) – employee bonuses that drive down costs (perfect attendance, schedulecompletion, etc.) And Continental did turn around a very “beat up and worn out” employee group afterthe last bankruptcy in the mid 1990’s.

Interestingly enough – many of the CAL senior flight crews - continue to use the “Proud Bird” and “Pride” in their in-flight announcements and customer discussions. (CAL used the advertising themes of
“Proud Bird with the Golden Tail” and “Service with Pride” in the 1960’s and 1970’s.)

And CAL senior management has agreed not to receive their salaries for the last 7 months of 2008 in conjunction with the upcoming flight and employee reductions..

The UAL EXO crowd would never dream of that.

Hopefully United will not drag CAL down.

Take care.

Star Alliance membership aligns Continental with some of the best premium carriers on Earth, including Singapore Airlines (always ranked #1). It also gives Continental’s customers access to extensive service to Australia (which SkyTeam doesn’t have). Linking up with United for codesharing doesn’t mean that Kellner’s team is going to abandon its strategic plan or start emulating United’s standards of customer service… it never emulated Delta or Northwest during its time in SkyTeam. This move is a good one for Continental that will help it stand out in a very competitive market.

The nice part about Web 2.0 is that errors are not always forever.

Thanks for catching this.

And come to think of it, how do they track the success of the alliances?

What I also find interesting is that you both seem to be pointing at CAL jumping in to be ready to pick off the bits from a United carcass.

1. Access to UAUA’s East Asia network - arguably the most desirable piece

2. A test drive for UAUA’s premium customers - the contrast in service quality will ensure CAL retain most of its premium customers and possibly grab UA’s premium customers down the road. Even better, to demonstrate that Kellner could manage a combined network better than UAUA’s management