Just as anticipated, it was reported today that Continental Airlines and United Airlines are supposedly talking about a potential merger, “according to media reports that cite people familiar with the matter.”
In answer to a few emails from some folks today, here’s our take on this “news.”
One, just as the news about a potential US Airways/United deal was clearly “leaked” last week by those on the United side of the potential deal in an attempt to gauge the market interest in such a match-up, the news today that has Continental and United talking another potential merger is no different.
Here’s the deal: United Airlines wants to do a deal with somebody. It may be Continental. It may be US Airways.
I could talk at length about the potential plusses and minuses of either deal.
But frankly, those details are not going to be the determining factors in terms of which airline United ends up doing the merger dance with.
Just as was the case with both failed potential merger deals last year involving the same three players, an eventual deal will depend heavily on the role current members of upper management at United Airlines take in any deal. Particularly United Airlines Chairman and CEO Glenn Tilton. As I wrote this week in PlaneBusiness Banter, one of the big factors in the failure of the Continental deal, and a complicating factor in a proposed US Airways’ deal was Tilton’s insistence upon keeping control in both deals.
But at the same time, Tilton knows that both US Airways and Continental would like to link up with United. And pressure is building on Tilton to get a deal done. He’s only been talking about doing one since he took his position with the airline in 2002.
Frankly, I think Continental would be better off to sit and wait out the current matchmaking attempts. Unless Continental CEO Jeff Smisek and his management team can take control of the new merged entity. Continental already has an advantageous partnership agreement with United, and both airlines are in the Star Alliance. (As is US Airways.)
With US Airways, sources who are involved with the deal tell us that CEO Doug Parker appears willing to let Glenn Tilton stay on in the role of Chairman, with Parker taking the CEO position. But would Tilton be willing to give Parker the control he would need to put together a new management team?
One thing is for sure. This deal, when all is said and done, will be all about ego. Forget routes, forget aircraft compatibility. Forget which deal the markets finds more appealing.
At the end of the day, United Airlines Chairman and CEO Glenn Tilton and his desire to retain control of United is what is going to make or break any new attempt at a merger.