jetflier
Well-known member
- Joined
- Dec 22, 2003
- Posts
- 718
"The goal of a merged airline is to make more money than the individual airlines could generate. However, that only occurs after the merger is completed. The initial stages of a merger are expensive. Airplanes have to be repainted, computer systems must be built or modified to suit the new company, maintenance plans harmonized… the list is long. Some of the basic financial numbers for the combined Delta/Northwest are expenses of a little over $30B and cash on hand of approximately $7B. As a general rule, airlines need as a minimum cash on hand of 15% of annual expenses. In this case, the total is about $4.5B. That means the corporation has about $2.5B to accomplish the necessary renovations required by a merger.
Our analysis indicated enough cash on hand to pay for the expenses required during a merger. However, our analysis didn’t allow for costs associated with labor strife or bad management decisions,. Both can be costly, and there isn’t a pad for either. The decision to exclude the NWA pilots is starting the process off in the wrong direction
We see a high risk for the corporation and its employees if the merger continues down its current path. This situation is reminiscent of what we experienced with Republic/Northwest or what we have witnessed at USAirways/America West. It also reminds us of the tactics used by Frank Lorenzo during the CAL/EAL years. Perhaps that should be expected considering the background of many of the executives at NWA and DAL who are alumni of the Lorenzo school of management at CAL.
Risk for the Northwest Pilots
In addition to the risks for the new corporation, there is risk for NWA pilots. We are being asked to accept vague promises of contractual improvements and resolution of a seniority list.
The new management team has promised to ‘use its best efforts’ to negotiate a new contract for NWA pilots. For a pilot group that earned a battle star fighting over reaching management tactics in the 1990’s, this is an empty promise, and management’s tactics reveal the lie behind the promise.
Courtesy of NWA management, we are faced with a new buzz word – ‘harmonization.’ This is another way of saying management isn’t offering NWA pilots pay parity for four years. There is nothing new here; this is effectively a re-run of Bob Crandall’s B-scale. This proposal is a serious roadblock to a new contract.
Granting the DAL pilots a contract raise that places them close to the gains negotiated in February has serious implications for NWA pilots. The DAL pilots will have little incentive to negotiate a combined contract. And, a combined contract is required before an integrated seniority list can be used. Further, if the DAL pilots don’t like an arbitrated seniority list, they can stall a contract negotiation until the end of 2012 with no economic penalty. USAirways v. America West has provided a good education on the effectiveness of this technique.
DAL’s LOA contains a no furlough clause. There is no restriction on furloughing NWA pilots. We would have to negotiate that provision as part of a new contract.
Finally, we have concerns over the DAL MEC’s sincerity about arbitrating a seniority list. The DAL MEC chairman, Lee Moak, flatly stated that the DAL MEC would not agree to an arbitrated seniority list. Now, after agreeing to contract improvements for DAL pilots, Moak has announced they will accept arbitration. Why the change in attitude? The answer may lie in the ALPA merger process. Under the process it can easily take two years to get an arbitrated decision. As we stated above, to integrate the pilots we must have both a combined contract and a seniority list. As the pilots at USAirways have demonstrated, it can take a long time to negotiate a combined contract. Especially if you don’t like the arbitrator’s seniority list award.
In short, we have no assurances of contract improvements or a quick settlement on a seniority list. Just the opposite, we see several obstacles to both and the possibility of prolonged negotiations to reach either. Simply put there is no incentive for the DAL MEC to negotiate in any serious manner for either a joint contract or seniority list since they have a contract in hand.
Management’s reluctance to negotiate was clearly demonstrated the day prior to the merger announcement. On Sunday, April 13 (during our Special MEC meeting), the DAL management team of Richard Anderson, Ed Bastian, and Mike Campbell meet with our MEC officers and Pat Brennaman (our attorney). Our team expressed a willingness to negotiate and noted that there was time to get the job done. Richard Anderson made it clear that doing so would be a disadvantage to the DAL pilots even thought they had already agreed to contract changes for the DAL pilots. They cited the faltering economy as reason for only being able to give the DAL pilots a raise at this point. DAL management concluded the meeting by stating that they would pursue a merger and deal with the NWA pilots after the fact.
The Decision to Oppose the Merger
It is tempting to ignore the risks in an effort to obtain what are rumored to be good pay raises. The MEC has weighed the issue and found the risks unacceptable. We are unified in that decision and will oppose the merger with all means available."
Our analysis indicated enough cash on hand to pay for the expenses required during a merger. However, our analysis didn’t allow for costs associated with labor strife or bad management decisions,. Both can be costly, and there isn’t a pad for either. The decision to exclude the NWA pilots is starting the process off in the wrong direction
We see a high risk for the corporation and its employees if the merger continues down its current path. This situation is reminiscent of what we experienced with Republic/Northwest or what we have witnessed at USAirways/America West. It also reminds us of the tactics used by Frank Lorenzo during the CAL/EAL years. Perhaps that should be expected considering the background of many of the executives at NWA and DAL who are alumni of the Lorenzo school of management at CAL.
Risk for the Northwest Pilots
In addition to the risks for the new corporation, there is risk for NWA pilots. We are being asked to accept vague promises of contractual improvements and resolution of a seniority list.
The new management team has promised to ‘use its best efforts’ to negotiate a new contract for NWA pilots. For a pilot group that earned a battle star fighting over reaching management tactics in the 1990’s, this is an empty promise, and management’s tactics reveal the lie behind the promise.
Courtesy of NWA management, we are faced with a new buzz word – ‘harmonization.’ This is another way of saying management isn’t offering NWA pilots pay parity for four years. There is nothing new here; this is effectively a re-run of Bob Crandall’s B-scale. This proposal is a serious roadblock to a new contract.
Granting the DAL pilots a contract raise that places them close to the gains negotiated in February has serious implications for NWA pilots. The DAL pilots will have little incentive to negotiate a combined contract. And, a combined contract is required before an integrated seniority list can be used. Further, if the DAL pilots don’t like an arbitrated seniority list, they can stall a contract negotiation until the end of 2012 with no economic penalty. USAirways v. America West has provided a good education on the effectiveness of this technique.
DAL’s LOA contains a no furlough clause. There is no restriction on furloughing NWA pilots. We would have to negotiate that provision as part of a new contract.
Finally, we have concerns over the DAL MEC’s sincerity about arbitrating a seniority list. The DAL MEC chairman, Lee Moak, flatly stated that the DAL MEC would not agree to an arbitrated seniority list. Now, after agreeing to contract improvements for DAL pilots, Moak has announced they will accept arbitration. Why the change in attitude? The answer may lie in the ALPA merger process. Under the process it can easily take two years to get an arbitrated decision. As we stated above, to integrate the pilots we must have both a combined contract and a seniority list. As the pilots at USAirways have demonstrated, it can take a long time to negotiate a combined contract. Especially if you don’t like the arbitrator’s seniority list award.
In short, we have no assurances of contract improvements or a quick settlement on a seniority list. Just the opposite, we see several obstacles to both and the possibility of prolonged negotiations to reach either. Simply put there is no incentive for the DAL MEC to negotiate in any serious manner for either a joint contract or seniority list since they have a contract in hand.
Management’s reluctance to negotiate was clearly demonstrated the day prior to the merger announcement. On Sunday, April 13 (during our Special MEC meeting), the DAL management team of Richard Anderson, Ed Bastian, and Mike Campbell meet with our MEC officers and Pat Brennaman (our attorney). Our team expressed a willingness to negotiate and noted that there was time to get the job done. Richard Anderson made it clear that doing so would be a disadvantage to the DAL pilots even thought they had already agreed to contract changes for the DAL pilots. They cited the faltering economy as reason for only being able to give the DAL pilots a raise at this point. DAL management concluded the meeting by stating that they would pursue a merger and deal with the NWA pilots after the fact.
The Decision to Oppose the Merger
It is tempting to ignore the risks in an effort to obtain what are rumored to be good pay raises. The MEC has weighed the issue and found the risks unacceptable. We are unified in that decision and will oppose the merger with all means available."
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