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Delta, Northwest pilots wary of merging
Tue Feb 26, 2008 3:37pm EST
By Chris Reiter - Analysis
NEW YORK (Reuters) - Bigger may not be better for Delta and Northwest pilots.
A possible merger between Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research) to create the world's largest airline is in a holding pattern as the carriers' pilots wrangle over integrating seniority lists for more than 11,000 pilots.
Seniority rankings, which determine everything from a pilot's wages, hours worked, routes flown, and vacation time, are excruciatingly difficult to merge.
Unlike other professions, pilots cannot transfer the seniority they accumulate at one airline to another. For that reason, the blending of two seniority lists must result in some pilots losing seniority to others during the integration.
"It's almost never done without rancor and resentment," said Jim Gray, a retired Delta pilot, who chaired the organization that represented retired Delta pilots before and during the airline's bankruptcy.
Delta pilots generally make more money and fly newer planes than their counterparts at Northwest, while Northwest pilots tend to have more years of experience and want to protect their seniority.
Northwest pilots, for instance, want to keep the privilege of flying the carrier's big Boeing 747 aircraft in the Northwest family even after a merger. They have proposed fencing them off from pilots at Delta, which does not fly 747s, according to two people familiar with the negotiations.
Such rules could hamper integration and create internal tensions.
Representatives of the airlines and the pilot groups declined to comment on the pilot talks.
YOUNG DELTA
Another stumbling block is the fact that over a thousand Delta pilots took early retirement packages before Delta filed for bankruptcy in 2005.
"This had the effect of moving more junior pilots up the seniority list at a very rapid rate," said Dean Booth, a lawyer with Atlanta law firm Miller & Martin.
"They found themselves flying wide bodies at a much younger age than had been their expectation. They don't want to lose that status," said Booth, who has previously represented both Delta and Northwest.
Merging Northwest's pilots with the younger, yet senior, Delta pilots is creating friction.
"There is apparently this faction within the Northwest group that views the Delta pilots as younger, less experienced and less worthy, so to speak," airline consultant Robert Mann said.
Both sides are wary of making mistakes.
The Air Line Pilots Association (ALPA), which represents both Delta and Northwest pilots, is still smarting from its experience at US Airways Group (LCC.N: Quote, Profile, Research), which formed in 2005 from the merger of US Airways and America West.
ALPA faces a movement to oust it at US Airways, which has not combined its pilots into a single group nearly three years after merging with America West, largely because of seniority issues.
Northwest pilots also know first-hand the risks of an ill-received seniority deal. Tensions, stemming from a rancorous integration of Northwest and Republic pilots after their 1986 merger, still course through the airline.
"Twenty-two years on, they still look out different windows," said retired Delta pilot Gray.
SWEETENING THE DEAL
Despite the difficulties, a deal is not dead.
Delta has offered the pilots a roughly 10 percent equity stake in the combined carrier. Both pilot groups also stand to get higher wages, with lower-paid Northwest pilots expected to get a relatively bigger raise, according to people familiar with the talks.
Also, pilot unions have generally accepted that the notoriously volatile U.S. airline industry needs to change in order to become more stable.
"Everyone has invested a ton of time in this," said Jerry Glass, president of F&H Solutions, a consulting group that has represented airlines in union negotiations. "That's a sign that they believe in it."
(Additional reporting by Kyle Peterson in Chicago; Editing by Tim Dobbyn)
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Tue Feb 26, 2008 3:37pm EST
By Chris Reiter - Analysis
NEW YORK (Reuters) - Bigger may not be better for Delta and Northwest pilots.
A possible merger between Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research) to create the world's largest airline is in a holding pattern as the carriers' pilots wrangle over integrating seniority lists for more than 11,000 pilots.
Seniority rankings, which determine everything from a pilot's wages, hours worked, routes flown, and vacation time, are excruciatingly difficult to merge.
Unlike other professions, pilots cannot transfer the seniority they accumulate at one airline to another. For that reason, the blending of two seniority lists must result in some pilots losing seniority to others during the integration.
"It's almost never done without rancor and resentment," said Jim Gray, a retired Delta pilot, who chaired the organization that represented retired Delta pilots before and during the airline's bankruptcy.
Delta pilots generally make more money and fly newer planes than their counterparts at Northwest, while Northwest pilots tend to have more years of experience and want to protect their seniority.
Northwest pilots, for instance, want to keep the privilege of flying the carrier's big Boeing 747 aircraft in the Northwest family even after a merger. They have proposed fencing them off from pilots at Delta, which does not fly 747s, according to two people familiar with the negotiations.
Such rules could hamper integration and create internal tensions.
Representatives of the airlines and the pilot groups declined to comment on the pilot talks.
YOUNG DELTA
Another stumbling block is the fact that over a thousand Delta pilots took early retirement packages before Delta filed for bankruptcy in 2005.
"This had the effect of moving more junior pilots up the seniority list at a very rapid rate," said Dean Booth, a lawyer with Atlanta law firm Miller & Martin.
"They found themselves flying wide bodies at a much younger age than had been their expectation. They don't want to lose that status," said Booth, who has previously represented both Delta and Northwest.
Merging Northwest's pilots with the younger, yet senior, Delta pilots is creating friction.
"There is apparently this faction within the Northwest group that views the Delta pilots as younger, less experienced and less worthy, so to speak," airline consultant Robert Mann said.
Both sides are wary of making mistakes.
The Air Line Pilots Association (ALPA), which represents both Delta and Northwest pilots, is still smarting from its experience at US Airways Group (LCC.N: Quote, Profile, Research), which formed in 2005 from the merger of US Airways and America West.
ALPA faces a movement to oust it at US Airways, which has not combined its pilots into a single group nearly three years after merging with America West, largely because of seniority issues.
Northwest pilots also know first-hand the risks of an ill-received seniority deal. Tensions, stemming from a rancorous integration of Northwest and Republic pilots after their 1986 merger, still course through the airline.
"Twenty-two years on, they still look out different windows," said retired Delta pilot Gray.
SWEETENING THE DEAL
Despite the difficulties, a deal is not dead.
Delta has offered the pilots a roughly 10 percent equity stake in the combined carrier. Both pilot groups also stand to get higher wages, with lower-paid Northwest pilots expected to get a relatively bigger raise, according to people familiar with the talks.
Also, pilot unions have generally accepted that the notoriously volatile U.S. airline industry needs to change in order to become more stable.
"Everyone has invested a ton of time in this," said Jerry Glass, president of F&H Solutions, a consulting group that has represented airlines in union negotiations. "That's a sign that they believe in it."
(Additional reporting by Kyle Peterson in Chicago; Editing by Tim Dobbyn)
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
