NEW YORK, August 16, (Investor's Economic Resources)
DAL-SKYW deal first effect of New Paradigm
The sale of Delta's ASA subsidiary to Skywest for $425
million gives DAL some breathing room and may set the stage for Delta
to broach the subject of much needed further wage concessions from
More interesting, is that the sale was probably the first
tangible effect of the new paradigm in labor relations that could
take place if Northwest Airlines is able to replace it unionized
mechanics with much lower paid employees. NWAC will be able to impose
wage cuts of 26% and layoffs on Friday when the federally imposed
cooling-off period expires. This will be the first time a major
airline has essentially de-unionized a major segment of its
workforce. It will be the beginning of a new paradigm for labor
relations in the airline industry and possibly have wider
It is doubtful that the highly union-phobic SKYW would have
bought ASA if it did not think it could ultimately remove the unions
from the ASA property. SKYW probably intends to use the same tactics
that NWAC is using to remove the mechanics union (AMFA) with some
SKYW could use personnel from its non-union operations to
replace the ASA workforce if necessary. In this way SKYW will be able
to "Walmartize" its operations. Walmart is union-proof because it can
take the negotiating stance that it will never agree to a contract
that ever pays unionized workers as much a non-union workers. With
5,000+ stores Walmart can afford to keep any one unit shut
indefinitely, rather than sign a contract paying union members as
much as non-union members (and certainly never more than non-union
members). Once Walmart employees understand this stance, they
understandably will never vote to certify a union.
SKYW will probably adopt the same stance with the ASA unions
and use the NWAC tactic of waiting until the cooling-off period
expires and then imposing cuts with a reserve army of replacement
workers waiting in the wings. This new paradigm will set the tone in
airline labor relations for years to come. If NWAC is able to impose
wage cuts without resorting to bankruptcy it might lead to a
repricing of all securities in the airline industry. The valuation
gap between legacy airlines and low-cost carriers could narrow
Except SKW pilots ( 50 seat anyway) make more than ASA pilots and have better work rules. Why replace the cheaper labor? Neither SKW or DAL want that interruption of service, unlike Lorenzo Jr at NWA who would see the company fail if it means a mgmt victory over labor.
This place could run much more smoothly with a little cooperation in place of the hatred that is aimed at the pilots. The pilots at ASA have been treated so badly for so long that any little act of decency will be warmly recieved.
And to the converse - these pilots are spun up for a fight to shut the place down. So either way, I am convinced the ASA pilots are uniquely qualified to deal with whatever the situation presents us.
Furlough whom?!? We can't even staff the airplanes currently on property, and training is running 2 months behind on IOE (through no fault of their own). Therefore, more pilots will be brought into the training department, creating even more vacancies on line.