The two airlines formed by Jim Varney are now one. Even though corporate combination was concluded a year ago, today at midnight GMT, Continental and United operated under a single operating certificate. Although it is Continental’s operating certificate that survives, at 1200 Zulu 30November2011, the Continental call sign is replaced with the UAL sign – “UAL”.

I have been a lover of all things Continental since 1984. Only weeks after I moved to Houston, Frank Lorenzo‘s Texas Air Corporation acquired Bob Six’s Continental in a hostile take-over financed by Continental’s cash assets and business assets. “Frank”, as he was widely known throughout his tenure raping and pillaging first Texas International, then Continental, then Eastern, then PeoplExpress (including Frontier), was a master of using the Federal bankruptcy courts to accomplish his goals. In 1983, Frank threw the whole kit and kaboodle into bankruptcy to avoid (cancel) the union contracts that came with the Continental Airlines acquisition. ALPA struck Continental in bankruptcy, only to discover that the world had moved on and that the pilots’ strike wouldn’t cripple operations as it had in the past. Frank also started up a new, non-union shop in New York called “New York Air“, leveraging Continental’s resources and certifications.

Through tribulations, the Continental employee base struggled and achieved. From a West coast niche airline, Continental briefly enjoyed being the world’s largest airline when Frank insisted on a “mash-up” of Continental, Frontier, PeoplExpress, New York Air and what remained of Eastern on a single day without much in the way of planning.

I’m sure that my love affair with Continental stemmed partly from they’re being a local company to Houston. My best friend Scott working for them, and being on of the funniest, more engaging people I’ve ever known certainly brought me in more tightly. Before I met Scott, though, I was a charter member of Continental’s TravelBank – their frequent flier program which was supplanted by the absorption of Eastern’s much larger OnePass program in 1986. I still have my first day of issue OnePass card with a number so low that it makes gate agents eyes pop when I’ve pulled it out of hiding. I’m going to miss having that number.

Continental went from “worst to first” with the arrival of Gordon Bethune. More than six years ago, I noted that Continental was the first North American carrier to come close to replicating Pan Am’s global route system. Now, with the United merger, they have exceeded that measure.

As a merged entity, United  is the only world carrier with a multi-hub presence that reaches every continent save for Antarctica. Sure, the big European carriers also go everywhere, but they are all based in a single hub city – their travel is in/out from that hub. Two trans-pacific hubs, nearly three. Two Latin America hubs, four transatlantic hubs. As they merge into a cohesive operating unit, they’re going to do some serious corporate combat, especially in the Latin American, northern Pacific and European/South Asian routes.

Continental, from Bob Six’s glory to Gordon’s army of zealots, has always made less work harder. When Bob Six ordered 707s from Boeing, he had his engineers create a unique, new maintenance check system that performed the lighter checks during RON, rather than taking them off line and routing them into maintenance. This allowed him to run his six 707s as if they were eight or maybe even nine, even allowing Continental to run TWA out of the ORD-LAX competition. During Gordon’s day, the DC-10 and then the 777 fleet were utilized upwards of 20 hours out of 24. Scheduling kept everything on a hot boil, and the tight ship produces revenue multiples that most other network carriers couldn’t understand.

Given that it’s Continental’s ops certificate that will survive, and given that Continental ops/scheduling seems to be prevailing in the merged entity, what kind of 800 pound gorilla will United be with significantly higher utilization? A dominant 800 pound gorilla, that’s what.

Although they will thrive, and will be the dominant international network carrier, the days of a DC-10 pub service, of the Proud Bird with the Golden Tail, of BusinessFirst being competitive with International First, of an energized and exuberant work force making things happen for a large customer base that prides themselves on knowing the Continental “secret” are well and truly over. Nothing of United’s merged behavior conveys that the new carrier’s “pizza” will be all that different from anyone else’s.

Rest well in our memory, Continental Airlines. May your name and your history rise to rank with that of Pan Am, Braniff and others that led the way with you.

Seems to me that we need some updated abbreviations for the new United; typing out what we are trying to communicate is so clumsy.

So, I humbly suggest that we adopt the following abbreviations for the new United –

UA/UAL – the combined United in its entirety

LUAL – Legacy United – fleet, practices, employees, everything

LCAL – Legacy Continental – fleet, practices, employees, everything

That is all.

How about American being dominated by British Airways and Qantas?

It’s no secret that American’s in a bad way – they’re going to be knocked down from King of the Hill to #3 in short order. They’re out of cash. Their fleet is old. Their route structure needs amping up. They don’t service Oceania anymore. They’re very weak across the Pacific. They’re weak to Europe in comparison to Delta or United’s structure.

What to do? Especially when Lufty snaps up Doug Parker’s little project?

Let someone else drive.

All right, so I’ve hit the big three – now it’s time for something REALLY out there on the skinny branches.

United (new) is going to order a TON of new equipment in the next five years, including some 747-8i.

United has a fleet of very new (and very efficient) 737NG aircraft, and a fleet of ratty and very old A320. United leased the A320 from Airbus in 1992; and took delivery of them over the next few years. Only legacy Northwest’s A320s are older.

As I have previously noted, the A320 service life cannot be economically extended, and as these ships age out, they’ll be replaced. By Boeing.

United’s 744s have been kicked around for quite some time, but they’re good performers. They have 24 in service, and about half were delivered prior to 1992; the rest between 1997 and 2000.

The 744s have an outstanding used market for freighter conversions. At some point in the not so distant future, United is going to join Star Alliance partner Lufthansa in operating the 747-8i. It may be only a boutique fleet, but it’s going to happen.

Let’s jump from airplane surprise to airline shocker –

USAirways will sell itself to Lufthansa.

This makes perfect sense. USAirways cannot continue to thrive where they are virtually shut out by Delta, United and American. They don’t have the hub and route structure necessary, they have almost no funding for expansion or new equipment and .. if they have to file again, this third time won’t be the charm.

Virgin America has already demonstrated exactly how to handle the foreign ownership restrictions that would limit any such transaction. No wheels to re-invent.

Lufthansa has already acquired and dramatically improved several airlines in Europe – Swiss, Austrian, SNBrussels, and seems to have a lock on SAS. But, they have nothing but O&D in the biggest airline passenger treasure chest of all – North America.

Lufthansa has the ability to inject the cash, provide the extraordinary management, the IT capacity, the route planning, and to provide appropriate aircraft to make USAirways a true competitor to the other Legacy majors in North America. With that, Lufty will be able to compete directly with its Star Alliance partners in North America, and with Delta and American.

Doug Parker? Lufthansa has your Golden Ticket.

Following my prediction that United (new) will be the King of the Hill once they get their operations consolidated, it’s time to drop a big ol’ bomb on the conversation.

Delta is going to buy all 88 of AirTran’s Boeing 717 fleet, and use them to replace MD-80 series aircraft, as well as some of legacy Northwest’s older A320s.

Delta has been in the used market, snapping up every MD-90 they can find. The MD-80s have Flintstone era technology, and suck down gas like my old ’73 Chrysler Imperial did. The A320s are NOT designed for constant rebuild and rehab as are Boeing ships, and Delta has already begun retiring some of the older A320s.

There isn’t a single iota of possibility that Southwest will hang onto those 717s for a moment longer than is necessary. Qantas Air Link is unlikely to buy them. TWA is gone. Midwest Airlines is gone. JetStar already ditched all of theirs. Who’s going to take on a completely new aircraft type that has already been discontinued?

Delta’s already warming up the checkbook. You can count on that.

I always love this time of year, as it brings me back into direct contact with some of my favorite people – who are also tax clients. I love catching up, and being there to make a process more comfortable and confident for my peeps.

One conversation that I look forward to all year is with a senior Continental FA who, after over 30 years of working in aluminum tubes, is still more beautiful and vivacious than most 25 year old girls.

I also love her sense of humor. Her latest was “FLIBS” — to describe the current band of pirates running UCon (my pet name for merged Continental). The acronym translates into “Frank Lorenzo in Better Suits”.

Sure, there are synergistic benefits to the combined companies. We’re already starting to see the re-gauging of EWR and IAD to more appropriate frequencies and capacities. But, no one is fooled that this wasn’t the effort and desire of the top brass and their investors (primarily JPMorgan Chase) looking to score big.

Apparently, my gal pal recently was in a room with Jeff (the merger master and progenitor) and was asked why she didn’t know who he was. Her reply was “I’ve been here over 30 years. Those guys come and go, but I’m still here. Who they are is irrelevant.”

This is a lesson that Big Corp needs to receive, 5×5. These huge companies are operated by single, human beings – who generate revenue with their efforts. Big Corp always tries to increase the amount that goes into their pockets by villainizing employees. But, when Big Corp does away with in flight services, who is it that pays the direct price? When Big Corp takes out their big salary and bonus payment and moves on to the next big thing, who is it that remains to continue the enterprise?

You want your premium customers coming back, but you are willing to force new, more restrictive wage and work rules onto your employees? Guess how well that’s going to work out for you.

All workforce populations age. The young and vigorous becomes the matured and capable. You pay them more, because of their ability to manage the unexpected and to do so smoothly and with confidence.

Given the selfish profit motivation of the Merger Managers, I can only assume that they’re looking for a way to outsource mainline pilots to a bunch of 14 year old Thai boys with XBox sets.

That way of thinking is flawed and needs to come to an end.

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