GogglesPisano
Pawn, in game of life
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- Oct 20, 2003
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WSJ 04-08-08
Delta-Northwest: Pilots Need Not Apply
Posted by Heidi Moore
Here is some incentive for those pilots to work out the seniority lists in the talks between Northwest Airlines and Delta Air Lines: airline jobs are disappearing.
Four airlines have ceased operations in the past week: Aloha Airlines, ATA, Champion Air and Skybus Airlines. They were hit by the price of oil and the pressure of competing with larger, more diversified airlines–some of whom recently emerged from bankruptcy-law protection themselves. Avondale Partners analyst Bob McAdoo said this week there might be at last one more to fall: Virgin America. And Merrill Lynch noted this week that Sun Country Airlines has “announced plans to furlough almost 30% of its pilots, effective May 1. While the carrier currently plans to recall these pilots on October 31, we think that could be wishful thinking if the macro backdrop does not see material improvement by then.”
What does this mean for the economics of the airline industry? French investment bank Calyon expects the global industry to post losses of as much as $1 billion this year. And Merrill Lynch noted that many of the big airlines are cutting capacity–Delta, for instance, is cutting capacity 5%, and, as a result of the reduced flying, is looking to shrink its employee rolls by 2,000.
As for the bankruptcies, Morgan Stanley airline analyst William J. Greene said in a research note this week that larger airlines including Delta may benefit from the closure of Skybus, which was a competitor in Columbus, Ohio.
While fewer airlines mean less choice and potentially higher fares for consumers, the ones who might be really worried are the pilots who are holding up Delta’s talks with Northwest over the issue of coordinating pilot seniority lists. The innovative talks are putting labor before an actual merger agreement, but they have hit multiple snags. Delta, in a game of high-stakes chicken, has asked for its pilot-seniority system to prevail. The two sides are in something of a hurry, because of potential regulatory resistance when the clock runs out on the Bush administration.
Recently, the WSJ reported that Delta is considering pushing ahead with a deal with Northwest without an agreement on pilot seniority. Whether this was just a warning shot to pilots or not, the pressure is clearly on pilots now to help this deal along. After all, it doesn’t look like anyone else is hiring.
Delta-Northwest: Pilots Need Not Apply
Posted by Heidi Moore
Here is some incentive for those pilots to work out the seniority lists in the talks between Northwest Airlines and Delta Air Lines: airline jobs are disappearing.
Four airlines have ceased operations in the past week: Aloha Airlines, ATA, Champion Air and Skybus Airlines. They were hit by the price of oil and the pressure of competing with larger, more diversified airlines–some of whom recently emerged from bankruptcy-law protection themselves. Avondale Partners analyst Bob McAdoo said this week there might be at last one more to fall: Virgin America. And Merrill Lynch noted this week that Sun Country Airlines has “announced plans to furlough almost 30% of its pilots, effective May 1. While the carrier currently plans to recall these pilots on October 31, we think that could be wishful thinking if the macro backdrop does not see material improvement by then.”
What does this mean for the economics of the airline industry? French investment bank Calyon expects the global industry to post losses of as much as $1 billion this year. And Merrill Lynch noted that many of the big airlines are cutting capacity–Delta, for instance, is cutting capacity 5%, and, as a result of the reduced flying, is looking to shrink its employee rolls by 2,000.
As for the bankruptcies, Morgan Stanley airline analyst William J. Greene said in a research note this week that larger airlines including Delta may benefit from the closure of Skybus, which was a competitor in Columbus, Ohio.
While fewer airlines mean less choice and potentially higher fares for consumers, the ones who might be really worried are the pilots who are holding up Delta’s talks with Northwest over the issue of coordinating pilot seniority lists. The innovative talks are putting labor before an actual merger agreement, but they have hit multiple snags. Delta, in a game of high-stakes chicken, has asked for its pilot-seniority system to prevail. The two sides are in something of a hurry, because of potential regulatory resistance when the clock runs out on the Bush administration.
Recently, the WSJ reported that Delta is considering pushing ahead with a deal with Northwest without an agreement on pilot seniority. Whether this was just a warning shot to pilots or not, the pressure is clearly on pilots now to help this deal along. After all, it doesn’t look like anyone else is hiring.
