Merger Mania!

In an unusually transparent move which analysts believe is a response to the government's renewed watchfulness against corporate fraud, anti-competitive behavior, and profit motive, United Airlines and Continental Airlines management yesterday posted to unitedcontinentalmerger.com an audio recording and transcript which details the process by which top executives agreed to the proposed merger between the companies. Although the date and location of the recording is unspecified, company insiders say the conversation took place in the steam room at St. Moritz's Palace Hotel during an IATA function there in March 2010. The following is true to the original transcript except for the added explanatory remarks in brackets.

[beginning of recording]

Doug Parker [USAirways]: ..."and after that, all I remember is waking up in Central Park the next morning with a raging hangover and wearing only a leather gimp suit."

[uproarious laughter, multiple voices]

Gerard Arpey [American]: "Ol' Bob was quite the prankster. Between that night, the time he tied Lorenzo's shoelaces together, and the B-scale, we really miss him over at American."

Parker: "Yeah, we had some good times. Hey Jeff, you gonna bogart that bottle of Remy? Pass it down!"

Jeff Smisek [Continental]: "Um, you already have my fifth of Blue Label."

Parker: "Drank it all!" [sound of shattering glass]

Smisek: "You almost hit me with that, you crazy drunkard! Now who's going to clean up this mess?"

[sound of door opening]

Richard Anderson [Delta]: [calling] "Oh Glen! Come here for a moment and do bring a broom, won't you?"

Glen Hauenstein [Delta]: "Right away, sir."

Smisek: "You gotta be kidding me. You couldn't just bring your mistress like everyone else, Rich?"

Anderson: "I've found Glen to be absolutely indispensable. I don't go anywhere without him."

Glenn Tilton [United]: [shouting suddenly] "Consolidation is our salvation!"

Smisek: [groans] "Oh jeeze. Don't start up with that consolidation crap again, Tilton. Seriously, give it a rest, man!"

Anderson: "Mr. Tilton isn't entirely wrong, you know."

Smisek: "Don't encourage him, Rich. And for what it's worth, your merger has really kinda turned you into a smarmy prick. Not that you weren't before."

Anderson: "Don't be that way, Jeffery, jealousy doesn't become you. Nothing's stopping you from merging Continental."

Smisek: [laughs] "Oh, exactly which one of these winners do you propose I merge with?"

Tilton: "Pick me, pick me!"

Smisek: "Not freaking likely. You couldn't even get USAirways to merge with you. No offense, Dougie."

Parker: "Naw, it's okay man. I just wish I could go back to the happy days of running America West and driving around Phoenix blitzed out of my skull." [sighs]

[sound of door opening]

Hauenstein: "Your broom, sir. Oh, hi Jeff."

Anderson: "Be a good man and sweep up the broken glass, won't you Glen?"

Smisek: "Good Lord. You left me for this schmuck, Glen? I never treated you like that."

[awkward pause, sound of glass being swept]

Tilton: [shouting] "Consolidation will finally enable capacity discipline!"

Arpey: "Of course, the death of United would do the same thing."

Parker: "Or USAirways. I don't really care anymore." [sobs quietly]

Smisek: "It really pains me to see you like this, Dougie. Here, have a nice glass of cognac."

Hauenstein: "If that's all, sir, I ought to be going. Oh, hello there, Mr. LaHood. Come on on."

Ray LaHood [US Secretary of Transportation]: "Hiya, Fellas! How's the airline biz?"

Anderson: [groans] "Dear heavens, who invited this vile man to our function?"

Arpey: "Don't be rude, Richard. Mr. LaHood is here on my invitation. Glad you could make it, Ray!"

LaHood: "Thanks a bunch, Jerry! Always wanted to come on one of these junkets."

Anderson: "Do close the door, you're letting the steam out."

[sound of door closing]

Tilton: [shouting] "Consolidation will finally raise yields to profitable levels!"

LaHood: "Whoa! Hiya Glenn, you surprised me! Good to see you though, buddy. You're dead on about the yield stuff."

Anderson: "You know what else would help push yields to profitable levels? Letting the LaGuardia/National slot swap between Delta and USAirways go through."

Parker: [slurred] "Yeah! What he said!"

LaHood: "Now, now, fellas. We're perfectly happy to let your little swap go through. We just want to confiscate a quarter of the slots and redistribute them the carriers of our choosing to finally bring some competition to two of the most under-served airports in the country. Back in Chicago, we call that the price of doing business!"

Anderson: "How does one even respond to that?"

Arpey: "Sound like a reasonable position to me, Ray."

[sound of door opening]

Anderson: "Why, what a pleasant surprise, William! Come, come, I've saved you a spot next to me!"

Arpey: "Bill! I've been looking all over for you! Come on in, I have an idea to bounce off of you!"

Anderson: "No, No, No! Don't listen to him, William, at least not until you've heard me out."

Arpey: "Bill can listen to whoever he darn well pleases, you're not his boss just yet!"

Bill Ayers [Alaska]: "Oh jeeze. Um, can you guys put your towels back on, or at least sit back down or something?"

Anderson: "Oh dear, my apologies. I just got a little careless in my great excitement over seeing you!"

Ayers: "Uh, yeah, I noticed. Um, I just remembered...I forgot something...uh, in my room...sooo...."

[sound of door slamming shut]

Smisek: "That was awkward."

Tilton: [shouting] "Without consolidation our industry is doomed to an endless cycle of boom and bust!"

Smisek: "You're really starting to get on my nerves, Tilton. It's pretty cold outside in the snowbank. I'm just saying."

[door opens]

Gary Kelly [Southwest]: "Howdy, ya'll!"

[mumbled greetings; door closes]

Kelly: "I just saw the darndest thing. Bill Ayers from Alaska was running the other way, barefoot and half-naked in the snow!"

[Parker laughs hysterically]

Arpey: "How are you enjoying St. Moritz, Mr. Kelly?"

Kelly: "Well, it ain't too bad I suppose. Kinda purty here. Ain't much like Texas, though, that's for sure!"

Anderson: "Oh dear, where to begin?"

Kelly: "I had a bit o trouble finding a McDonalds, with all the winding streets and all. And when I found it, those crazy buggers wouldn't even take my dollars!"

Anderson: "Who could've anticipated that the Swiss might prefer to be paid in their own currency?"

Kelly: "So I went to a bank - there were five within a half-block - and traded my greenbacks for this funny-colored money. Problem is, it took twenty bucks worth to buy a Big Mac and a Coke!"

Arpey: "Switzerland is an expensive country on an expensive continent."

Kelly: "It got me thinkin', though. If Europe is so rich and dandy, and if their money buys so many dollars, why don't we price our tickets in their money?"

Arpey: "We do, for tickets originating in Europe."

Kelly: "Well that's just downright smart. In fact, come to think of it, Southwest really oughtta fly here."

[all gasp in alarm]

Anderson: "Honestly, Mr Kelly, Southwest's structure doesn't lend itself very well to international operations. Your aircraft are too small to fly across the Atlantic and your network is too dispersed to feed widebodies."

Kelly: "Well darn it, I need to fix that somehow."

Tilton: [shouting] "Consolidation is the answer to all our problems!"

Kelly: "Glenn, you ol' sly dog, you're a genius! United has the jumbos and the hubs to bring the Southwest Effect to the rest of the world!"

Smisek: "What!? No, no, no, no, no!"

Kelly: "Whaddaya say, pardner? Southwest and United?"

Tilton: "I'll sign this very minute!"

Smisek: "Somebody tell me this is a bad dream!"

Anderson: "Let's not be hasty, do remember any such deal will require DOT and DOJ approval, which seems unlikely."

LaHood: "Actually, Mr. Tilton has shown himself to be very, erm, flexible. I'm sure we can work something out."

Smisek: "No, stop! I'll do it! I'll merge Continental and United!"

Parker: [burps] "Are you drunk out of your mind or what, man?"

Smisek: [moans] "What choice do I have!?"

LaHood: "It looks like you have two offers, Mr. Tilton. Who will it be?"

Tilton: "I pick Southwest!"

Kelly: "You got yerself a deal!"

Tilton: "We'll name the merged airline United to retain its stellar reputation for customer service, and replace all those godawful poop brown 737s with super-efficient outsourced RJs, and I get to be co-CEO!"

Kelly: "Are you insane? You already ran one airline into the ground, pardner, I'll be whooped if you're gonna ruin mine too!"

Anderson: "Your move, Jeffery."

Smisek: "OK Glenn, here's the deal. We take the United name but keep the Continental paint. My niece is good with computers, she should be able to photoshop United onto the side of a Continental 787 or something. No more RJs but we'll keep the ones you have. I'll run the airline, but we'll give you a big bonus and an important-sounding title. How does 'Non-Executive Chairman' sound?"

Tilton: "Do I still get to come to these IATA parties?"

Smisek: "Of course! Even Doug Steenland still tags along. Tell him, Richard."

Anderson: "Yes, he's around here somewhere. Last I heard, he was hot-tubbing with the Swiss beach volleyball team. The women's team, I think."

Tilton: "It's a deal!"

[door opens]

Smisek: "Dave! What are you doing here? I thought you were out of the industry!"

David Neeleman [former jetBlue]: "I'm back, baby! I'm starting up a hot new airline, and I have some great new ideas that have never been tried before! We're going to base it at one of the busiest airports in the US, where we can cherry-pick the most profitable routes. And we'll fly brand-new airplanes with spiffy leather seats and entertainment systems. We'll employ young, attractive crewmembers, all at starting pay. We'll offer the cheapest tickets, and everyone will love us!"

Arpey: "Not to burst your bubble, Dave, but I foresee real problems raising venture capital in this economy."

Tilton: "I want in! I have a big bonus check on the way!"

Smisek: "Well, there's also the small matter of procuring slots. All the popular airports are at capacity."

Parker: "I'll sell you our LaGuardia operation for a case of Jack!"

Anderson: "Doug, the DOT won't let you sell those slots, remember?"

LaHood: "No, we won't let him sell to Delta. A new entrant, we'd have no problem with."

Neeleman: "We're in business, baby!"

Smisek: "God help us all. What are you going to call it?"

Neeleman: "I was thinking something with people in the name, and something fast-sounding. What do you think of People Express?"

[end of recording]