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?
If you haven’t heard already, you’re probably not a Northwest or Delta flyer. Subject to regulatory review, Delta and Northwest Airlines are merging. The new (old) name will be called Delta Air Lines. The details can be read from the following email sent out to a Northwest WorldPerks member.
Letter to a Northwest WorldPerks Member:
Dear John Smith,
As a valued Northwest Airlines customer and WorldPerks® member, I wanted you to be among the first to hear that we have announced a merger with Delta Air Lines. Subject to regulatory review, our two airlines are joining forces to create America’s premier global airline which, upon closing of the merger, will be called Delta Air Lines.
By combining Northwest and Delta, we are building a stronger, more resilient airline that will be a leader in providing customer service and value. Our combined airline will offer unprecedented access to the world, enabling you to fly to more destinations, have more flight choices and more ways than ever to earn and redeem your WorldPerks miles.
You can be assured that your WorldPerks miles and Elite program status will be unaffected by this merger. In addition, you can continue to earn miles through use of partners like WorldPerks Visa®. And once the new Delta Air Lines emerges you can look forward to being a part of the world’s largest frequent flyer program with expanded benefits.
The combined Delta Air Lines will serve more U.S. communities and connect to more worldwide destinations than any global airline. Our hubs – both Delta’s and Northwest’s – will be retained and enhanced. We will be the only U.S. airline to offer direct service from the United States to all of the world’s major business centers in Asia, Latin America, Europe, Africa and around North America.
Both airlines bring tremendous strengths to this new partnership. Our complementary service networks form an end-to-end system that is truly greater than the sum of its parts. This is a merger by addition, not subtraction, which means all of our hubs – both Northwest’s and Delta’s – will be retained. In addition, building on both airlines’ proud, decades-long history of serving small communities, we plan to enhance global connections to small towns and cities across the U.S.
All of these positive benefits of our combination mean that we can: * Offer a true global network where our customers will be able to fly to more destinations, have more schedule options and more opportunities to earn and redeem frequent flyer miles in what will become the world’s best and most comprehensive frequent flyer program. * Continue to serve our current roster of destinations and to maintain our hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York, Salt Lake City, Amsterdam and Tokyo. * Improve our customers’ travel experience, through new products and services including enhanced self-service tools, better bag-tracking technology, more onboard services, including more meal options, new seats and refurbished cabins. While we work to secure approval of our merger, which may take up to 6 to 8 months, it will be business-as-usual at both airlines. We will continue to operate as independent airlines and the people of Northwest will remain focused on providing you with the very best in safe, reliable and convenient air travel. At the same time, both airlines will be planning for a seamless integration of our two airlines, one that delivers to you the enhanced benefits that will earn – and retain – your preference.
As we work through this process, we will keep you informed at every step along the way. Thank you for your business and we look forward to serving you on your next Northwest flight.
Sincerely,
Bob Soukup Managing Director, WorldPerks
There you have it - straight from the horse’s mouth.