And the Winner Is?

The Continental and United merger is one hell of a deal. Consider that the merged entity will make the new United the largest airline in the world. In the process it will serve 370 destinations in 59 countries, generate almost $30B in annual revenue carrying about 144 million passengers a year. It will have many complimentary hubs providing strong US domestic service and strong service to Latin America, Asia, and Europe. It will have 91 million members in its frequent flyer club and it will deploy more than 700 mainline aircraft.

However, inevitably there are winners and losers in any consolidation and merger initiative. Here’s a few of each, but remember, it depends on your perspective:

Winners

• Executive Management (buy outs for those not staying, stock options and higher salaries for those that do stay)
• Passengers (more choices and better frequent flyer benefits)
• Continental and United (lower unit costs, much more market clout than if they were independent airlines, which should translate into higher fares increasing profitability potential for the new entity)
• Boeing (combined fleets, at least initially will be predominately Boeing; given that position, will likely put Boeing in better standing for new aircraft acquisitions)
• Consultants and Lawyers (it will take a few to slam these airlines together; consultants and lawyers always seem to end up on the winning side...one way or another)
• Paint Shop (someone’s got to paint all those United airplanes)

Losers

• Passengers (yeah, I know I called them winners, but they will be paying higher fares over the long run, and that isn’t fun)
• Employees (can you spell redundancy)
• American Airlines (now needs a merger partner; how about JetBlue to start with but in bigger terms, access to Asia more important than ever)
• Airbus (may be wrong about this one, but the manufacturer could get squeezed out)
• Rolls-Royce (how does Rolls-Royce get selected on the 787 now)
• Vendors (of all sorts; bigger clout and buyer power can squeeze some vendors, from the smallest to the largest)
• Houston (CO headquarters moving to Chicago; Chicago does have better pizza, though)