UA/CO merger effect on regionals
 

Looks like a CO UA merger could be announced on Monday.

United, Continental Move Closer to Merger - WSJ.com

Just wanted to get everyone's take on what this will mean for the various regionals involved with the two airlines. Who stands to benefit? Who stands to lose out? Could this complicate Mesa's bankruptcy?

Slappy will be right with you.

Mesa might end up without their 70 seaters. I think the airlines that will win are going to be Skywest, GOjets and republic. The reason being is that UAL/CAL will want to add as many 70 seaters as they can as soon as they can and GOjets and Skywest have the lowest costs in the industry for 70 seaters.

The airlines that will probably lose will be Trans states and Expressjet. I see Trans states losing out since the growth will be on the 70 seat side and the whole mess with them and gojets will complicate things. I see expressjet worse off out of anyone, I say this because they will have the biggest piece of the pie at about 240 50 seaters, and I think that can be cut down when parts of their contract come up. Didn’t their cal contract say that the 215 planes they have now can be taken down to 190 or something and didn't their UAL contract state that their 30 can be dropped down to 20? Expressjet will have more 50 seaters flying for UAL/CAL than all the other airlines’ fleets combined. That and CAL has made it their mission to screw expressjet at every turn and now that CAL management is taking over UAL I don’t see that changing. The 50 seater is an obsolete airplane and the growth will come from the 70 seaters. If I was expressjet I would be getting some 70 seaters soon but I given their cost box I doubt they would be able to compete with the rest.

I see UAL/CAL making deals with airlines like Tran states and Skywest to swap our their 50 seaters for 70 seaters. Skywest only has about 50 or so crj 200s that fly for UAL and I don’t know how many Tran states has but I’m sure it can be done.

That's the million dollar question. It all depends on a joint contract scope. If we get CAL's scope, then you might actually see UAL/CAL recall some furloughees and maybe even fly E-170/190. If Tilton & Smisek get their way, you'll see another 2,000 CAL/UAL furloughees, another 150 parked 737s, and a booming RJ industry.

I doubt that the scope will be reduced to 50 seats again. That would just destroy the new airline, they have become dependant on 70 seaters.

I know about 12,000 CAL/UAL pilots who want to add as many 70 seaters as they can at mainline. I'm not wishing any ill towards RJ guys out there, but if I was king for a day, anything over 50 seats would be flown by mainline. Anything flown from a major metropolitan area would be mainline. Anything flown long distance would be mainline.

Let me get this straight... keeping 50 seat scope would "destroy" the new UAL? From my perspective, 70+ seat scope is what ruined the current UAL. Just think, after the CAL/UAL merger, the new UAL will be nearly as large as it was 10 years ago.

I value your right to free speech... but seriously, do you THINK that the new UAL will maintain 70 seat scope, or do you HOPE that the new UAL will maintain 70 seat scope? There's a huge difference between the 2.

Oh that's not the CAL way. We park the biggest airplanes and fly one airplane too small on all of our routes. We love to see how far we can fly a 737. :)

slappy I think your wrong on this one. Look at the leverage that the unions have in how smoothly the merger process goes. NWA/Delta worked so well because the pilot group played along and really helped it move forward at the pace it did.

Now I hope the pilot groups will use that leverage to regain the +50 seat flying, but more likely they will use the lever to cap the current number of 70+ seat a/c at or maybe even slightly below current levels. My guess is there will be no room for any growth in the 70+ seat market.

I agree that the 50 seat regionals will get hurt in this. Again look at the delta merger. Most of the competition between these companies comes from using 50 seat a/c in the smaller markets to hit the hubs. Why would you continue to run 2 50 seat regionals 1 to CLE and 1 to ORD at the same time when you could run 1 larger a/c to ORD. That is exactly what has happened with the delta merge. The regionals are where all of the job loses occured.

Maybe you are right, but as someone said before about UAL/CAL doing away with all current 70 seaters, that is just not possible. That would be too much of a financial shock for the new airline.

To be clear...90% of us RJ pilots want flying kept at a mainline. Every single time that a regional puts another aircraft into service, that further degrades our chances of getting to a mainline. If you keep all the flying, we can get to a mainline quicker and fly a 70 seat aircraft on mainline pay as opposed to regional pay. The only people that really want to fly "the newest big thing in the regional world" are the idiots with the shiny jet syndrome that will sell their sole to fly something "big"

I agree with the person that you were quoting. But I agree with you too. It was 70+ seat scope that ruined the current UAL, along with other carriers too. However 70+ is becoming the new norm. So now if the new UAL was to restrict scope to 50 seats, it would kill them because it would put them in at a competitive disadvantage. The only way a major would benefit by 50 seat or less scope is if all major from here on out stuck to that.

You guys have to be realistic. The scope will not be 50 seats at the new UAL. It will be 70. Like Slappy said, it would be way too costly for UAL to get rid of all the contract 70 seaters, then buy some themselves, then start up a training program for them, then train thousands of pilots to fly them. Not happening.

Its crazy CAL has been at a competitive disadvantage for years and they still have been able to pull profits. AAL on the other hand, have struggled with too many MD80s on CR7 routes

I wouldnt get all excited about more 70 seat jets at a regional anytime soon. If you have talked to a CAL pilot lately they arent rolling over on scope. It is going to take a bankruptcy for management to get scope relaxed and that doesnt look like it will happen anytime soon. They need both pilot groups to play nice and management should be willing to give them something to make this happen. Stopping the flow of jobs going to regionals should be their #1 goal.

As for who would win or lose flying it is a complete gamble. I wouldnt neccessarily dog any airline (regional or major) in this fight. Any 50 seat regional contract can be renegotiated on a 2-1 deal for a larger aircraft. I will bet money that if CAL and UAL merge and scope gets relaxed that XJT, CHQ, Skywest, or even Mesa will play ball with management to "right size" the fleet. In XJT case Does CAL want to continue paying out a 50 seat contract for 5 more years when they could get 70-90 seaters?

Who wants to retire at a regional? not me. Screw the "regional" jets and lets get that flying where it belongs.

If 70 pax is a magic number, the winners might be the folks with Q400s. New York to Chicago only about 15-20 minutes longer flight than a jet while burning 30% less fuel.

Maybe ATRs could make a comeback.

When you have new 737's that carry the same amount of passengers as small 757's with a CASM that is untouchable in any "regional" .... These behemoth airlines have the magnitude to fill the seats of planes a lot bigger than 70 seats.

70 isn't the magic number. In management's view, there is absolutely no limit to the maximum size of outsourced flying. Management would happily allow Colgan to fly 777s internationally for $20/hour. If it wasn't for union contracts, I think Mesa would be the launch customer for the 787.

I have no problems with E-190s or Q-400s. I think they're perfect mainline airplanes! I have no problem getting paid a livable wage flying them for CAL or UAL.

Realistic is a permanent CAP on the number of outsourced jets and jobs. If mgmt wants more "RJ's" then by all means they can have all they want. The catch is that from this point on it should be mainline pilots at the controls for any additional aircraft post merger.

Realistic is that the merger integration will allow at LEAST the current number of UAL 70 seaters.

I cannot even imagine what CAL ALPA would have to give up to actually roll back UAL's 70 seat allowance.

I think that UA pilots want scope badly enough that the combined pilot group will probably be able to hold the line where it is.

And I would love to have a Cal/UAL seniority number while flying my lowly Saab. Unfortunately, I cannot make that happen. Maybe if North Central and Southern Airways (the ORIGINAL Republic Airlines) had not merged with Northwest, there would still be a large and respectable turboprop airline.

The thrust of my comment was apparently missed: big turboprops will make a comeback on the runs of 700 miles or less. If the mainlines pilots cannot force management to put them on mainline pay scales then the regionsals that have them will grow. I don't like it, but that seems to be the way things are.

((Vive la Convairs and Martins http://www.southernairways.org/SO_mu...404%20song.mp3))

All they need is a stipulation that all +50 contracts will not be renewed. As they expire, the aircraft transition to mainline service. It would be a sore deal for the regionals but would smoothly transition the planes back to mainline.

A few things: First, CALs current contract with XJT has a 2 for 1 replacment clause to bring in larger aircraft to replace the 50 seaters. Second, the former CEO at CAL and the former CEO of XJT had the beef, niether one of them is still there. Third, XJTs contract can't be touched for another 5 years. Finally, why is no one mentioning that the new XJT CEO came from UAL as the former VP of United Express operations? You think thats a coincidence? I guess we'll see.

The bottom line is, with XJT doing more regional flying than anyone else at either carrier, there is no way the new airline will pay for 190 50 seaters to fly around for another 5 years without doing something about it.

Also let me add, XJT just got a pretty good size contract with UAL within the past few months. If UAL was planning on merging with CAL and getting rid of XJT, why would they sign a 5 year contract with them so recently?

That is possible, but will cost the pilot group dearly...will the senior guys sign up for a decade or more of financial suck just to secure the future for those who come behind them? There's your answer I suspect.

Nobody is planning on getting rid of any regional right away...it will take several years just to settle the terms of the SLI, then a few more for implementation. Five years is not long in the grand scheme of things...if they need to ax XJT, they will have time to do it.

Actually they might have deliberately entered into that contract to use it as a scope placeholder against labor..."but we just signed a contract with them, we cannot afford to buy them out of it this early"

Do you realize the magnitude of the feed we're talking about replacing? XJT operates nearly 250 airframes for the combined carrier. We're not talking about some small little regional that operates 20 or 30 airframes here. Somebody would have to do a lot of hiring and a lot of a/c buying to replace these routes. XJT currently dominates IAH and EWR for CAL. They operate far more flights than even mainline. I guess if they tighten scope back up all these jobs could be filled by furloughed UAL and CAL guys. In the end that would honestly be the best thing for everyone.

UAL and CO pilots have the last chance to rein in on scope and take back flying to mainline UAL and CO pilots. If they don't, then expect the same fiasco UAL management brought upon UAL pilots for the last 10 years.

The days of the 50 seat and possibly 70 plus seat RJ flying is coming to a fast close. I think 100 seat aircraft should replace most of the domestic flying for mainline flights and UAL/CO pilots better make sure 100 seat flying is to be done by UAL/CO pilots, otherwise their junior pilots are doomed. They should be prepared to fight tooth and nail on this one issue. They may even have to fight their own senior wide body CAs on this one.

It wasn't a 5 year contract it was one 2 year contract for 10 and one 3 year contract for 10.

CO/UAL wil probably just retire 50 seaters and replace them with current 70 seaters. There is plenty of overlap and I wouldn't expect CLE to be around very long.

It was more than just 2 ceos not liking each other. XJT has always been a burden for cal as not only do they own their aircraft but still have to pay a high fee to have them flown. Given the history it seems CAL is either trying to put you guys out of business or just get rid of you.

Its no secret that XJT is in financial ruin, every quarter is loss. XJT’s new ceo also specialized in taking companies in and out of bankruptcy. It seems that is the only thing that could save xjt right now and that’s why I think they got that new ceo.

I hate to sound like a broken record but the XJT mec made a big mistake not making a deal with skywest and allowing the buyout 2 years ago. You guys would be in much better shape and have a much better future.

Exactly, I do not see CLE making the cut, IAH and EWR are too important to touch.

deleted.... not worth it

We would have been fine with SKW purchasing XJT, only problem was SKW wanted to run us separately like ASA which our contract does not allow. We were not willing to waive that because we did not want to be a part of the 3-way whipsaw. A strong union contract with strong scope language is a great thing, you guys at SKW should try it sometime.

None of you know what is going to happen to the regionals and most your "educated guesses" are so far off from what will most likely happen.

Check your facts Bucko. The MEC said it would put it to a vote but did not have a chance because the BOARD OF DIRECTORS did not accept SkyWest's proposal. If you want verification of this a quick google search will yeild your results.

You guys can be very brainwashed.

As of May 1, XJT will have 32 A/C flying for UAL...with the 10 "temporary" jets looking not so "temporary."

So you're saying that Hanley having been VP United Express and US Air Express, and the man who spearheaded RAH's purchase of E170's has nothing to do with it. Seeing as its no secret that XJT's board of directors desperately want: 1) UAL flying, 2) US Air Flying 3) E170's and you still can't see why they chose him?

He restructured a coal company and that's what you're basing your opinion on? "Specialized" in bankruptcy after taking one Coal Company back to profitability...right.:cool:

You need to do more research on this subject, and more research on XJT. You are unaware of a lot of facts. I wonder how CAL felt about republic flying CRJ200's (also 50 seats) for them? Oh, thats right, they are gone now. XJT quickly replaced that flying too, hows that for being a burden. The only burden for CAL is the 50 seat scope, otherwise XJT provides an awesome product for cheap.

Uncontinited Air Lines?

It all comes down to the contract with ALPA at CAL right now. No one knows what will happen until 1) the merger is finalized, 2) CAL group signs a contract (may not happen now until after the merger), and 3) both seniorities are merged under a single contract.

We're talking years of work here. If anything, we may see slow paring down UA 50 seat ops out of their hubs and of the XJT CLE fleet.

Again, this will be a loooooooong, drawn out process. No one is going anywhere for the time being.

Just my two cents. But what do I know.

CLE isn't going anywhere. Just like Delta and CVG, CLE will be "right sized" but CAL has been able to draw CLE down to a profitable mini-hub that is supported with O&D passengers as well as connections. It might get a bit smaller as some connections are sent to IAD and ORD but if they relinquish control, another airline will swoop in to take the market share.

Why did they sign brand new 10 year deals with UFS and TSA only to unceremoniously dump them shortly thereafter? We are talking about the black widow of commuter aviation here. SkyWest has the longest continuous 'relationship' with United and it only dates back 13 years. Even TSA had 15 years with TWA before the AA deal(whom they've continued on with). UA has left many a regional high and dry before with little thought to their respective carrier(s) size, service level, or network concentration levels. They did it during periods of expansion (Mesa, UFS, TSA, GLA), they've done it during periods of contraction (ACA, AirWis). All this without a merger over the period that would make such capacity reductions easier and more appropriate.

Given the history of the industry in general and UA in particular with feeders, I don't think any carrier can ever truly feel comfortable with their position relative to UAL-although plenty have over the years and likely continue to do so. Especially when you consider that in any merger of this size, there's usually a war chest of financing that comes about. Theoretically, it's there to safely support the cost of integration and provide appropriate reserve funds to the new larger entity. In reality we all know that it usually gets squandered on bonuses and other bs vs. anything operationally related, but it also could provide something relative to this discussion. Any moves to terminate or modify the current express contracts(outside of Mesa's BK) would likely be met by legal opposition from the respective carriers. The size of the new UA's war chest would likely allow them to haggle longer in court relative to their opponent and could basically serve as a catalyst for a deal being struck to reduce or eliminate service voluntarily.

UA's always has played dirty pool with feeders and there seems little reason to believe that this will be any different. Especially with capacity reductions likely and recalcitrant mainline groups needing to be appeased for the merger to go through smoothing. It's gets even more interesting when you look at what Republic has done by purchasing Frontier and Midwest. While I'm sure they haven't said much publicly about it for labor reasons, I find it hard to believe UA was anymore excited about those deals than they were when ACA bent them over the barrel in early 2002 on the FPD rate increases. Internally, they said that would deal with it in time and they most certainly did. It wouldn't surprise me in the slightest if history repeats itself there.

Delta is "right sizing" CVG into non-existance. It will be gone as a hub in the next year or two. The ER category will be moving to SEA in the next few months. DET is too close and a much better hub.