If United doesn’t merge with another carrier, it could be facing a stronger competitor in Delta-Northwest and may lose some business.
“This deal is big enough and good enough that it can take revenue away from United,” airline consultant Darryl Jenkins said.
For a long time, United has had “the best route network of any American carrier. Now, they’re challenged.”
A wild card in the prospects for airline-industry consolidation is what path will be taken by the world’s largest airline, American Airlines.
American’s independent airline union could make merging airline seniority lists more complicated in a potential merger, according to CreditSights analyst Roger King. He said American could add stronger Pacific routes, which United and Northwest have, through a merger, but an American- United merger would not be likely to pass antitrust muster.
If laws limiting foreign ownership of airlines were changed, Jenkins said, a United-Lufthansa merger could work.
“What we want is the global airline. That’s what’s going on here — the ability to get corporate contracts from the global companies,” Jenkins said. “There are global companies but no global airlines.”
Airline mergers create stronger competitors for remaining players, but other carriers also expect to benefit from a cutback in capacity in the industry and higher fares.
Consolidation “bodes well for everybody,” Frontier Airlines spokesman Joe Hodas said. “It’s definitely a step in the right direction for the industry.”
Kelly Yamanouchi: 303-954-1488 or kyamanouchi@denverpost.com
