Airline Pilot Mergers

a320drivr

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Pilot seniority a hot issue at merging airlines

David Jones, Contributing Editor
7/8/2005
One of the not-so-surprising developments of recent weeks is the proposed merger of US Airways and America West Airlines. I am amazed that the financial trouble experienced by most major passenger airlines the past few years has not resulted in industry consolidation. It's not always fiscal trouble that facilitates merger talk in the industry, but it historically has been a factor in mergers and large asset acquisitions.

Airline industry history is rich with mergers and acquisitions. There have been periods during which airline mergers and major acquisitions happened in bunches. For the past 10 to 15 years, however, they have been relatively rare. American-TWA, American-Reno Air, Delta-Pan Am, and Southwest-Morris Air come to mind. Some proposed mergers, such as United-US Airways, have failed in recent years.

Pilots' collective bargaining agreements have a significant role in the merger process. In a true airline-airline merger, each carrier's pilot group would typically establish a merger committee, which is usually a relatively small (three or four) group charged with negotiating the particulars of the seniority integration. Each member is an advocate for his respective pilot group. It is not unusual for arbitrators to be involved because of the challenge of finding common ground with respect to seniority integration. The Air Line Pilots Association, the nation's largest pilot union, has a procedure established when two ALPA carriers merge.

Sometimes, there isn't much of a seniority "integration," as pilots of one carrier are added to the bottom of the seniority list of the other, typically larger or stronger, carrier. For example, pilots at Morris Air, a Salt Lake City, Utah-based 737 operator joined the bottom of Southwest Airlines' pilot seniority list when Southwest acquired Morris Air in late 1993.

To say that most airline mergers--or even rumors to that effect--cause pilots to get nervous is an understatement. I was at both America West's corporate and training headquarters in early 1999 when merger and acquisition rumors were circulating about that carrier. It was the topic of conversation among the employees to say the least.

Aspiring pilots and those outside the industry may not understand why seniority integration creates such heartburn. Seniority is everything to airline pilots; it typically determines aircraft and seat--which determine pay--and schedules. It determines whether you keep your job during a downturn, as furloughs--which are ridiculously common in the profession--start at the bottom of the list. The financial disparity between pilots at the same carrier can be $1 million or more because of seniority. I recall a pilot once lamenting his date of birth because it put him at the bottom of the list of a class of pilots at a major carrier in the mid-1980s. That carrier assigned seniority numbers based on age--oldest to youngest. When that carrier furloughed in the early 1990s, he was furloughed (briefly) while pilots in the same class--hired the same day--were flying the line. Howard Farrington, a retired Northwest Airlines pilot who flew with Hughes Airwest and was involved with the Hughes-Republic and Republic-Northwest mergers in the 1980s, learned first-hand the value of a seniority number.

"When I was offered the job, I was told I could start training the next Monday," Farrington said in a recent interview. "I was raised that you didn't walk off of a job, so I gave two weeks' notice to my employer. That decision cost me two classes and between 15 and 20 [seniority numbers]. It didn't make a huge difference, but it made a difference. Seniority is everything."

Farrington, who endured a furlough of nearly seven years and two mergers and ultimately retired as a DC-10 captain at age 60 before transitioning into corporate flying, served on the merger committee when Hughes Airwest merged with Republic. He said although he believes the two mergers he experienced were "like night and day," he said mergers in general have ramifications for pilots of both carriers.

"Wounds opened during mergers can take a long time to heal," he said. "There are still people who have negative feelings about the Republic-Northwest merger, and some probably always will."

The proposed US Airways-America West merger also has pilots on edge. Pilots at both carriers are cautious about the merger, and likely with good reason. US Airways pilots have taken considerable pay cuts and feel the pilots are "largely responsible" for the progress the carrier--which is currently operating under Chapter 11 bankruptcy protection for a second time in three years--has made restructuring its costs. US Airways has furloughed so many pilots that its currently employed pilot group is a senior group, while, on the other hand, America West began operations less than 22 years ago and has no pilots on furlough. To illustrate the difference, US Airways has pilots with dates of hire in 1988 on furlough. America West, on the other hand, was a 4-year-old carrier with 70 jet and turboprop aircraft in 1988, so only its most senior pilots have 17 years of seniority. You can see why pilots at each group might be concerned about how the two pilot seniority lists are combined.

America West management has conceded that seniority integration "will be a challenge," and is selling the prospect of possible enhanced job security and growth opportunities as a result of the merger. If the combined carrier achieves a management-identified goal of $600 million worth of cost savings/increased revenue, along with $1.5 billion in new capital, perhaps those opportunities will materialize.

Whether or not the merger proceeds to a conclusion remains to be seen, although the carriers last week apparently cleared the first of several regulatory hurdles. The past few years have taken an enormous toll on the compensation and benefits enjoyed by airline pilots. Pilots should be mindful of the impact mergers and acquisitions can have on their career, including their potential career earnings. The bottom line is that, as the past few years have illustrated painfully, there are no guarantees in the industry. Mergers are no exception, and while they aren't inherently disastrous, they can be a career threat to pilots.
 

XXXPILOT

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I was in a pool for North Central when the Hughes Airwest merger took place all of the poolies were dumped due to the fact that Hughes had pilots on furlough and took the place of the poolies....also I have a Sept of 1988 senority date at U and was furloughed on Feb 4 2003...Don't believe there is such a thing as company offered job security.....growth opportunities may or may not be a factor after the merger...If the management is as good at running an airline as they are at creative financing, the carrier should be a power house....
 
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