Continental Airlines CEO Jeffery Smisek, left, and United Airlines CEO Glenn Tilton. (AP Photo/Mark Lennihan)
By Wailin Wong | Gossip, a birthday phone call and a renewed relationship with an old flame: The story of how United Airlines and Continental Airlines got together is a romance for the ages. And like any good tale, this one has a cast-off lover, in the form of US Airways.
“What happened here is very simple,” Continental President and Chief Executive Jeff Smisek told analysts and reporters on a Monday conference call. “I found out through the news media that Glenn [Tilton, CEO of United] was looking at a potential other combination. I recognized that United is the best possible partner for Continental…I didn’t want him to marry the ugly girl. I wanted him to marry the pretty one, and I’m much prettier.”
When the first news reports emerged on April 7 that United and US
Airways were in negotiations for a possible merger, analysts already
voiced the possibility that United’s real desire was to get
Continental’s attention. Whether that was United’s intention, Smisek
took the bait. He called Tilton on April 9. On April 22, US Airways CEO
Doug Parker announced in a statement that its board of directors ended
discussions with United, even though US Airways had never confirmed the
media reports about negotiations.
Tilton, for his part, said the talks with US Airways were conducted in
earnest.
“When Jeff called me on the 9th of April, which happened to be my
birthday, suffice it to say we were very serious about the work that we
had underway at that time — very serious indeed,” Tilton said on the
call. “[But] at the end of the day…industrial logic and the telling
proposition we have presented to the marketplace today trumps work you
may have underway.”
Executives added on Monday that they expect US Airways to continue being
a “valued partner” in the Star Alliance.
A US Airways spokesman declined to comment directly on the
United-Continental deal, instead referring to Parker’s comments in an
employee newsletter dated April 30, as well as the CEO’s remarks on the
company’s April 27 earnings conference call. Parker voiced support for
consolidation in the airline industry, and acknowledged the speculation
over whether US Airway’s role lured Continental from the sidelines.
“It seems that details of our proposed transaction were leaked to the
media, and according to media reports, that was enough to spur
Continental into opening up discussions with United,” Parker wrote in
the internal newsletter.
On the Monday call with Tilton and Smisek, one reporter wryly noted that
“If Doug Parker wasn’t pissed off enough about the alleged leaks, he’s
going to be really happy being called the ugly girl in this.”
“I’m not talking about Doug…I think he’s a very handsome man,” Smisek
quickly interjected.
“I’m sure he’ll be very happy to hear that,” the reporter replied.
“That’s a great consolation prize.”
I like this merger, I’m a United Premier Executive and having CO extended my reach on Star Alliance (when it was in SkyTeam, I got to fly CO maybe once a year with miles going on my Air France Blue). Continental is the better airline, IMHO, so I am glad that it will be CO inside with their management and culture, even if it says United on the outside.
No problems with using CO’s globe logo but I don’t like their font, much prefer the black block letters of UNITED. (They would look good together!) Also like the new white United livery, why couldn’t they keep that and just repaint the tails (maybe get rid of the gold)?
I can see US bailing out of Star Alliance for OneWorld with AA and BA. I seem to recall that the old America West also had a relationship with BA out of PHX, so maybe that’s a better home for the new US.
I have always been a loyal United customer and have rarely had a miserable flight experience—even post 9/11 and bankruptcy. I’ve flown the other majors and discounters but I think most of them have fallen short of United in most of my experiences. Airline travel is not nearly as enjoyable as it used to be. The Soviet era style security check-ins and the fees for eye blinking, brow furrowing and any other uncontrollable bodily movement can make the experience sometimes less than tolerable. That being said, I have witnessed and experienced far less civil and tolerable behavior from my fellow passengers than from airline employees. More and more passengers have this sense of entitlement to do and say anything that pops in their mind. Often times I find myself admiring the frowning flight attendant for their restraint in not murdering the unruly, uncivil passengers. United used to be the gold standard prior to 9/11 for their service and frequent flier program. I think Continental’s involvement in management might make this new airline the gold standard once again. One can only hope. It’s nice to see Chicago get a major win in the business category for a change. When I first heard of the proposed merger, I assumed everything would be heading to Houston and the United name would be history like Marshall Fields. I wish this new airline the best success!
When we saw the headline about United, Continental and the “ugly girl,” I thought the “ugly girl” was a reference to the use of Continental’s bland logo, colors, and livery. United’s logo and colors are much more exciting. Using Continental’s logos and colors give the image of taking a step backwards. If they don’t want to use United’s–their ribbon logo is as classic as IBM or Apple’s logo–then they should then design an entirely new logo.
I hope that new CEO of United Airlines can maintain the same quality of service after this merger that I experienced while traveling with Continental Airlines. I just hope that the new Airline also eliminates the checked baggage fees (currently in place) and include them with the ticket price.
I wish the new airline and all its employees best of luck !!!
So they are basically just changing the word ‘Continental’ to ‘United’ and leaving everything else from Continental’s corporate image intact? It looks kind of cheap to be blunt. They may as well have called it Continental and at least keep the CO people happy.
Personally I find United’s current logo and livery much more appealing and nostalgic. But by appending the name to CO’s company image, they effectively abandon United’s heritage. Glenn saved UAL from the liquidators only to erase its corporate identity for Smisek’s ego.
The circle is almost complete.
Does anyone think American Airlines will sit idlely by while the new Delta and the new United dominate the industry?
No.
They will seek out a large domestic merger. US Airways is the only real “hub and spoke” bridesmaid left. But, Southwest is out there as well. American will try to take both.
The end result will be that consumers will pay higher prices, but the industry, which will be down to 3 or 4 significant carriers, will finally be profitable again…..and….we will then be exactly where we were in the late 70’s…..So what was the purpose of de-regulation?
So much for the de-regulation idea. Thank you ,President Carter. We had thirty years of competition and lower prices, but, in the end, it didn’t work.
A long but firm lesson in government interference.
Read more: http://www.azcentral.com/business/articles/2010/05/04/20100504us-airways-continental-merger-ugly-girl.html#ixzz0n1yori00
Personally, I think the rumoured US/UA merger was leaked to GET Continental off the sidelines and FORCE them to make a move (it’s been in the works for years). STAR Alliance is clearly behind this MERGER and I wouldn’t be surprised to even find out that USAirways was party to the combination. USAirways will play a role in either feeding the combined airline in areas where UA/CO have little presence or will bolt to AA and the ONEWORLD Alliance. UA/CO may look good on paper to Stockholders and the Executives but………SHOW ME You can make it work. Show Me. BIG doesn’t always mean Better. And United has LOTS of BAGGAGE….and I’m not referring to luggage!