Airtran goes for Midwest Airlines

[Lear70]

Is airtran ALPA?

No, so ALPA's integration policy is out the window, as ALPA won't see the light of day here at airTran anytime soon... just WAY too many anti-ALPA pilots in the ranks.

*CAUTION* Speculation ahead:

That said,,, although it's a hostile takeover bid, the letter from AAI management says "merger". No, it's not semantics.

If Midwest were out shopping for a buyer, a staple might be the game of the day, but it's not. AAI will be wooing the shareholders at Midwest, and that calls for "playing nice" on all sides, even if it IS AAI money they're putting in their pocket and not the other way around.

The thought of an integrated seniority list pure DOH just SUCKS, especially if you've been hired in the last 2 years at AAI.

The Midwest crowd is WAY senior and the AAI pay rates in the FO seat are NOT comparable with the industry, so imagine getting stuck there an extra 2 or 3 years?

And yes, even fences wouldn't save your upgrade track. Most fences (historically speaking) simply keep CA's from getting bumped down or a pilot from being displaced out of their domicile. Future upgrades usually are not fence protected.

3-4 year upgrade is one of the primary benefits of coming here. Take that away and a lot of guys who were otherwise happy to stay put might start dusting off those resumes for the majors as they start ramping up hiring next year.

Ugly, ugly, ugly for the employees on the AAI side of the fence if they go DOH, and that will breed a LOT of animosity.

I've said it before, unless AAI is buying a carrier with a straight staple to the bottom of the list, I'd rather stay a stand-alone company as we seem to be doing just fine on our own. And no, this isn't a slam on Midwest, please don't take it that way, it's simply that I'd rather not merge with ANYONE at this point...

And yes, Lowecur, that includes both DFW and MDW where the loads are good (80%+ LF) and the fares about the same as they are anywhere else in our system (i.e. not drastically reduced in order to compete). More gates would have been even better in a market we seem to be faring just fine in (excuse the pun).

 

[Lear70]

Midwest is ALPA and any merger has to take the contract into account, which includes seniority list issues.

Yeah, but,,,

It really depends on your integration / merger policy as stated in your contract.

If your contract SPECIFICALLY has integration language, then any merger, acquisition, or even purchase would have to abide by that integration language.

If your contract does NOT have a section specifically dealing with this, and AAI is the purchasing carrier, guess what. You all just became new members of the NPA (National Pilots Association) at AirTran, a la' American/TWA (although I'm guessing DOH would be pushed).

So that's the question: does Midwest have integration / merger protection policy in your current contract or not?

 

[furloaded]

" In the event of a Successorship Transaction which results in an operational merger in which the Successor is an air carrier or any person or entity that controls or is under the control of an air carrier, the Successor shall provide the company's pilots with the seniority integration rights provided in section 3 and 13 of the Labor Protective positions specified by the Civil Aeronautics Board in the Allegheny-Mohawk merger.'' "... any such integration will not result in a system flush."

So whatever protections and rights are offered under the Allegheny-Mohawk merger will apply, whatever they may be.

 

[Lear70]

" In the event of a Successorship Transaction which results in an operational merger in which the Successor is an air carrier or any person or entity that controls or is under the control of an air carrier, the Successor shall provide the company's pilots with the seniority integration rights provided in section 3 and 13 of the Labor Protective positions specified by the Civil Aeronautics Board in the Allegheny-Mohawk merger.'' "... any such integration will not result in a system flush."

So whatever protections and rights are offered under the Allegheny-Mohawk merger will apply, whatever they may be.

The Allegheny-Mohawk merger was 1972 law where the two sides couldn't agree on seniority integration.

Without going into a lot of boring details, the law basically says that two carriers combining into a single operational unit (not maintained as two separate working groups) must join together under one bargaining unit.

The seniority rights of such a carrier would have to be worked out between the two unions or, if an agreement could not be reached, binding arbitration would then rule. NO law suits in other words.

No one can be forced to take a position at a lower income level than they already hold, or be paid a pretty large chunk of their current salary as compensation by a formula I can't remember right off hand.

Does NOT address seat position or relative upgrade potential, only keeps you from getting displaced to a lower-paying position.

There's been a couple of tests to this in federal appeals courts over the years. It's gone both ways, but the main thing to bear in mind is that the arbitrator has never been allowed to use pre-existing financial condition of either airline to influence what is "fair and equitable" to both pilot groups (In other words, the "you weren't going to have a job anyway so be happy to be stapled" argument doesn't hold).

Basically your group and ours would have to come together and decide seniority integration (or eventually an Arbitrator would be appointed), but ALPA would be eventually gone as the NPA is the union of the PURCHASING carrier. Would be the other way around if you guys were purchasing us.

 

[Wesb737fo]

From what I've heard this has been in the works for some time, but the Midwest Mgt. folks have been saying no thanks (Could you blame them, who wants to lose their job).

AAI went public with the information so the shareholders could see and decide what they want.

I don't have any idea how these things work, but I would guess the board and major shareholders at Midwest have known about this for some time. If Midwest management has convinced them that they can survive alone, I wonder what AAI going public with the offer can really do to convince them otherwise.

As far as DOH integration, Agreed that it would suck for FO's. I'm pretty sure that a good percentage of the roughly 200 FO's at Midwest are senior to the people here at AAI. I know most of you would laugh, but there has to be a fair solution.

 

[Captainjerky]

Name

What would we be called? MidTran Connect?

I'd call it MidAir Connect-Tran Airlines, doing business as Air MidWest Jet/Prop Connect Airlines.

 

[BoilerUP]

If Midwest management has convinced them that they can survive alone, I wonder what AAI going public with the offer can really do to convince them otherwise.

Midwest stock is up over 20% right now.

I'm sure it had something to do with making alot of wealthy people even richer.

Look at this six month chart for MEH stock. Its up 100% over the last six months. Even though MEH has had some small profits during that time, somebody has known about something happening...

 

[fletch717]

FWIW,

If the "merger" goes through, I see the integration of seniority as a ratio.
350 pilots to 1500 = 5 to 1 roughly with a 3 year fence.

 

[Wesb737fo]

Midwest stock is up over 20% right now.

I'm sure it had something to do with making alot of wealthy people even richer.

Look at this six month chart for MEH stock. Its up 100% over the last six months. Even though MEH has had some small profits during that time, somebody has known about something happening...

Boiler...I think you're on to something there. It must be nice to get insider info and not go to jail.

 

[PlaneDrvr]

"........but ALPA would be eventually gone as the NPA is the union of the PURCHASING carrier. Would be the other way around if you guys were purchasing us."

Someone can 'correct' me if I am wrong (and sure they will); but I don't think this is exactly correct??

If two carriers merge and both groups are 'represented' (union), by different unions/representation; there would have to be a vote by the combined group for 'representation' by one union or the other. I believe that is what is specified by Federal Labor Law; and it does not matter who bought who??

Just my $0.02.

DA

 

[Lear70]

"........but ALPA would be eventually gone as the NPA is the union of the PURCHASING carrier. Would be the other way around if you guys were purchasing us."

Someone can 'correct' me if I am wrong (and sure they will); but I don't think this is exactly correct??

If two carriers merge and both groups are 'represented' (union), by different unions/representation; there would have to be a vote by the combined group for 'representation' by one union or the other. I believe that is what is specified by Federal Labor Law; and it does not matter who bought who??

Just my $0.02.

DA

To my understanding:

If it's a straight merger, then yes, a vote would be called.

If it's an acquisition, then no, again, a la' AA/TWA (don't recall an ALPA vote being called for representation during that whole fiasco, although they petitioned pretty hard for it during the acquisition).

Then again, I've been wrong before...

Why would their shareholders go for it? Well, they were never given the option DIRECTLY before. That's the whole POINT of a hostile takeover bid.

Previously, management made the decision FOR the shareholders, then put whatever spin on it they want after saying "No, thanks." The only way the shareholders can overrule that is for a majority of them to rise up, kick out current management, and appoint a new BOD (akin to recalling your MEC leaders and putting new MEC leadership in place).

Now, by taking the argument directly to the shareholders, you get to present YOUR side of the coin directly to the ultimate decision makers, then let THEM vote. Who knows, if the deal is sweet enough or they see better long-term gains owning AAI stock, they might go for it.

Amusing question, since Boiler posted the stock information is, since AAI is only offering a 25% premium on the stock and the stock is up 100% in 6 months, 20% in today's news. What will they do? Hmmmmm...

 

[737 Pylt]

FWIW,

If the "merger" goes through, I see the integration of seniority as a ratio.
350 pilots to 1500 = 5 to 1 roughly with a 3 year fence.

Fletch:
Can you imagine chuck/einstein/lawman/400ahole right about now???
He's probably already pooped his diapers!:laugh: :laugh: :laugh:
Let me know how good of a gear swinger he is for ya??

737
Oh yeah, she's just a flight attendant for Skyway anyway!

 

[fletch717]

Fletch:
Can you imagine chuck/einstein/lawman/400ahole right about now???
He's probably already pooped his diapers!:laugh: :laugh: :laugh:
Let me know how good of a gear swinger he is for ya??

737
Oh yeah, she's just a flight attendant for Skyway anyway!

I can hardly contain my excitement over that thought!!!!!!!

 

[tubelcane]

Alpa merger language doesn't mean squat. Alpa didn't help TWA /AA . Slightly different scenario with TWA bankrupt. But that's what those jagoff lawyers get paid for, to shred contracts after mergers to make them work.

When was the last time ALPA a successful integration as far as the Allegheny/Mohawk language? And don't say Allegheny/Mohawk!

 

[Lear70]

Heh heh... that's true enough.

And 5 to 1 sounds a little too generous, as it would be a windfall to the Midwest F/O's by shortening their upgrade track by 1/2 or more in some cases.

7 to 1 with a 5 year fence sounds about right to give Midwest pilots the same upgrade/career expectations as they now have. Remember, their upgrade track is running 8 years NOW, with what kind of retirements and growth currently scheduled?

Whatever the integration is, it would need to realize career expectations of two stable carriers with completely different upgrade timelines and Allegheny-Mohawk doesn't really do that. The arbitration would get pretty ugly methinks.

 

[likeitis]

5 to 1 would put the bottom FO's at Midwest behind the next 100 "AirTran" newhires and 7 to 1 would put the bottom Midwest FO's below the next 900 "AirTran" newhires. So these pilots are below people aren't even hired yet?

Try telling the 122 pilots at Midwest who were hired prior to Valujet, AirTran and Desert Sun were in existance that 5 to 1 is fair. By your idea of fairness a pilot at Midwest who was hired in 1999 should be at seniority number 1890 out of 1900 total pilots.

Lastly Midwest has about 400 pilots and the most recent upgrade has a hire date of 11/1999.

 

[fletch717]

I have been on the other side of the fence in a "merger". somebody is going to take it in the shorts. One good thing for MEH is a pay raise. I would gladly loose a little seniority for more money.

 

[Lear70]

No, it would put all newhires junior to existing Midwest F/O's. You're being overly dramatic to prove a point, and it's a poor basis for debate. You know good and well the bottom guys after the integration is done get stapled. That's how integration always works...

7:1 was based on you guys having 350 pilots as mentioned earlier, I didn't know the exact number.

And yes, 7:1 puts your most junior Captain (200 seniority approximately) about 100 numbers senior to our most junior new-hire. With a 5-year fence in place, it would assure that those new-hires who are here at airTran NOW would keep their 4 year upgrade expectancy they had when they came here.

It would ALSO ensure that your Captains remain Captains, as all the F/O's on property here would upgrade by then.

What's NOT fair is an integration where a guy who's been at Midwest for 4 years and was expecting 3 or 4 more years to upgrade now has an upgrade next year while the guy at the bottom of the AirTran list gets pushed back 4 years and now faces an 8 year upgrade track. I'd have gone to Midwest if I was interested in that...

The problem is the people in the middle. How do your senior F/O's retain their ability to upgrade while still respecting the career progression of the F/O's at AirTran?

 

[TWA Dude]

To my understanding:
If it's a straight merger, then yes, a vote would be called.
If it's an acquisition, then no, ....

ALL mergers are acquisitions. One carrier is considered the surviving one. In AWA/USAir, AWA was the aquiring carrier however the labor workgroups are being merged. I know that for the AWA bag-throwers and mechanics the Teamsters (AWA) lost and the IAM (USAir) won.

 

[Lear70]

ALL mergers are acquisitions. One carrier is considered the surviving one. In AWA/USAir, AWA was the aquiring carrier however the labor workgroups are being merged. I know that for the AWA bag-throwers and mechanics the Teamsters (AWA) lost and the IAM (USAir) won.

The difference is in how it comes about and how it's negotiated.

In your AWA/UAir comparison, the management parties both agreed for AWA Management to stay and the UAir name to stay. It was a negotiated part of the Merger.

An Acquisition can be a totally different animal. In AA/TWA, there was never any question of which was remaining.

The question is, which one will this be, since it's a hostile takeover bid?

 

[TWA Dude]

The question is, which one will this be, since it's a hostile takeover bid?

It's obvious AirTran will be the surviving entitly and due to their size it likely means their pilot union will take over as well unless ALPA is able to get enough of them to mail in cards calling for a representative election -- and wins. So the MW guys can most definitely get screwed in this. That's why they're against it.

 

[ultrarunner]

An offer with a 24% premium over the current stock price prior to the offer. And the offer is likely to go higher...that's an excellent premium on the stock price. A shareholder would be crazy not to dump it.

 

[fam62c]

This would probably spell doom for Skyway.

I don't think that this merger will happen unless AirTran increases their offer but if they are serious they can probably come up with enough additional cash to sell the deal to the shareholders. I'm wondering what would happen to Skyway in all of this? AirTran had a brief relationship with Air Wisconsin and decided, like most discounters, that they don't need any feed. Who knows, maybe AirTran wouldn't rule out a small wholly-owned with some RJ's for small markets and MKE/MCI feed because these hubs are WAY smaller than ATL. There's actually a very small possibility that this could be good for Skyway because AirTran has the capability to inject some cash into Skyway for much needed growth and fleet improvement..........but this is a real long-shot. Based on the AirTran business model I'm guessing that Skyway would be history. One thing to consider is that AirTran would need to dispose of Skyway and the 328's that are on long-term leases. I doubt anybody really wants the Skyway certificate and all that goes with it because the fleet is very undesirable. I wonder if AirTran is accounting for the "Skyway Disposal" costs when it talks about the cost savings that will be realized with a combined carrier? Just something to think about.

 

[Fly-By-Cable]

http://phx.corporate-ir.net/phoenix.zhtml?c=64267&p=irol-eventdetails&EventId=1436020

 

[Ualexpress]

AirTran has stated that they will keep all cities in the Midwest system. So I assume this means they will keep Skyways.

 

[400ADude]

Fletch:
Can you imagine chuck/einstein/lawman/400ahole right about now???
He's probably already pooped his diapers!:laugh: :laugh: :laugh:
Let me know how good of a gear swinger he is for ya??

737
Oh yeah, she's just a flight attendant for Skyway anyway!

Obsessed again are you? I would worry about your company rather than Midwest or Airtrash. Both of these companies are in a lot better shape than Delta.

 

[Flydaplane]

Listen to the conference call from this morning. They're keeping Midwest Connect, at least for now.
Upgrade at Midwest is non existant right now 10+ years. Midwest's pay is actually better by $1 for FO's than Airtran's (according to airlinepilotcentral.com), so no pay raise for the Midwest guys. Interesting note is that many pilots have stock options, would they vote for the merger and take short term $ or against it to preserve their positions? The true question is whether the Midwest board will be pressured into even addressing this. They kept it secret up until today. Smart play by Leonard.
Put the route maps of Midwest/Airtran/Alaskan together and you could go anywhere in US and Mexico you want to. Alaska has 737's on order so common fleet type as well, put that together with all the merger mania and the world or aviation gets a whole lot more interesting. HMMM
Doesn't airtran have a number of options for 737's as well as their firm order?

 

[Lear70]

Interesting note is that many pilots have stock options, would they vote for the merger and take short term $ or against it to preserve their positions? The true question is whether the Midwest board will be pressured into even addressing this. They kept it secret up until today. Smart play by Leonard.

Oh I can guarantee you the board will have to address it... that's the whole point of going public with it.

As far as the pilots,,, preserve WHAT positions?

As you noted, upgrade time is a LOT longer, the fleet MUCH smaller, future growth in serious question. What would they lose by coming to Airtran besides their own little fiefdom?

A lot of F/O's stand to gain considerably if the integration were to go DOH, or even if the integration went 5 to 1, so there's a large chunk of stock option votes in favor of.

The NPA came out with a statement saying they give it a slightly better than 50/50 chance of going through.

I think (unfortunately) it's closer to 70/30. Anyone want to bet a C-note on it?

 

[FDJ2]

Alpa merger language doesn't mean squat. Alpa didn't help TWA /AA .

The ALPA merger policy was not a part of the AA/TWA integration since the TWA pilots conceded their ALPA merger protections before the acquisition.

 

[ultrarunner]

I don't know what the strike price was of all those stock options awarded to the pilots, but they prly 'aint underwater anymore, and if the current price holds for another two days, I bet they all vest!