Continental: Responds to Delta & Northwest Merger
More merger news, this time directly from Continental. Interestingly, they started their own website to provide their perspective on the current airline industry consolidation.
Statement from Continental’s website:
As we’ve said repeatedly for more than a year and a half, our preference has been to remain independent as long as the competitive landscape remained the same. However, the landscape is changing. We will review our strategic alternatives and make sure we remain a strong long-term competitor. As always, our goal is to do what is best for our co-workers, shareholders, customers and communities we serve.
Translation: We will be consolidating in the near future.
The Wall Street Journal has an article on what airline consolidation means for fliers such as yourself. The title, “What’s in a Merger? For Fliers, Not Much” may be enough of a summary, but feel free to check out the article for the details. I’ve included a few choice quotes for additional context.
A few choice quotes from the WSJ article:
The history of airline combinations shows that travelers face a couple of years of more frequent missed connections, vanished reservations and lost baggage, flight delays and unhappy employees. Equally daunting for the companies themselves, many airlines have ended up losing the assets they bought.
Hubs and routes that were able to generate profits before the merger typically survive, and air service that struggled to make money before a merger often disappears after a merger.
New contracts for employees can push costs higher. Different types of airplanes drive expenses up by requiring more spare parts, more training for pilots and mechanics, and refitting of cabins and cockpits, for example.
…airlines already share passengers and, in the case of alliance partners, already price and sell their product as if they were the same airline. That’s true in the case of Delta and Northwest; they’ve already merged their flight schedules as SkyTeam partners. Generating new revenue may be tough.
At the same time, history has shown that competitors can take away customers of the merged airlines when their flights run late or labor groups stage protests. Another pitfall: Losing alliance partners. Continental Airlines Inc. is currently partnered with Delta and Northwest, but could well enter into its own merger feeling the need to get bigger. That could result in the Delta-Northwest combination losing substantial presence in New York and Houston, two of the four biggest cities in the country.
Doesn’t look great for the frequent flyer, but with oil prices chasing $100 dollars a barrel and the current economic situation - what choice do they have?