Recent Court Decision is VERY dangerous for Midwest, Airtran and future mergers

[Beetle007]

The judge basically says that if the ORIGINAL purpose of a transaction is to keep the airlines separate, then any future merger of the two airlines is NOT protected by the Bond/McCaskill amendment. The union employees of the acquired airline are NOT entitled to fair integration. You need good merger protections in your contract because the Bond/McCaskill amendment is now useless.

Why is the AFA fighting these battles and not ALPA. ALPA should have been the one fighting this battle for the Midwest Pilots.

Here is the court's legal opinion. Regardless of the outcome...it is a very dangerous legal opinion and sets a very dangerous precedent for future merger targets: http://docs.justia.com/cases/federal/district-courts/wisconsin/wiedce/2:2010cv00379/52921/20/

Here is the court case: http://dockets.justia.com/docket/wisconsin/wiedce/2:2010cv00379/52921/

 

[shearedshaft]

Where in the world did your crazy subject line and summary come from?

It looks to me like a simple denial of a "summary judgment" (throw the lawsuit out before it starts), which occurs in about 99% of all court cases.

I don't know where you got your hysterical subject line from, as I read it, the judge simply wants both side to present their whole case, and is unwilling to throw it out before this happens.

It's a case worth watching, but the idea that a summary judgment got denied isn't even news. It's expected.

From what page(s) of the ruling did you get the idea for your subject line?

 

[AKAAB]

With the official launching of the JetBlue ALPA drive, expect more and more of these anti-ALPA flamebaiting posts.

It's sad to see these desperate and pathetic attempts from a very small faction to twist the facts in order to paint ALPA as the apathetic boogeyman.

 

[Beetle007]

From what page(s) of the ruling did you get the idea for your subject line?

Page 12
"For McCaskill-Bond to apply, it must be shown that the purpose of the transaction was to combine multiple air carriers into a single air carrier."

The judge does not deny that the transaction resulted in the combination of the air carriers into a single air carrier. He considers that to be a fact. The judge is asking for the Midwest employees to prove that the original purpose was to combine the air carriers because the Republic employees are saying the original intent was to keep Midwest separate. The judge is saying if the original purpose was to keep them separate, then any future combination is not protected by McCaskill-Bond.

 

[FNG320]

What everyone also needs to remember, is that each of these companies also had merger protection in thier CBA. Even without Mckaskill- Bond the mergers will still lead to binding arbitration.

As for independant companies held by a single holding company. Even if they are ment to stay apart, they are still separate. If at any time they are merged/combined, this is a new transactional event and should be covered by McKaskill-Bond.

One more thing, Republic's CBA requires pilot integration of any other airline that Republic buys. Thus, regardless of intention, from day one, the pilot groups would be merged and thus McKaskill-Bond does apply.

Just my opinion.......

FNG

 

[Max Powers]

Get over my future SWA brother-en....We were acquired or bought (however you want to say it) to be MERGED. And for the record with over 50 737s on order and hiring going on to the tune of 10 percent of our pilot workforce.

 

[BlueYonder]

Gary Kelly has announced that he intends to merger the operation. I think that is good enough for the courts. Nice try though.

 

[Raoul Duke]

What everyone also needs to remember, is that each of these companies also had merger protection in thier CBA. Even without Mckaskill- Bond the mergers will still lead to binding arbitration.

As for independant companies held by a single holding company. Even if they are ment to stay apart, they are still separate. If at any time they are merged/combined, this is a new transactional event and should be covered by McKaskill-Bond.

One more thing, Republic's CBA requires pilot integration of any other airline that Republic buys. Thus, regardless of intention, from day one, the pilot groups would be merged and thus McKaskill-Bond does apply.

Just my opinion.......

FNG

Does the clause apply to the holding company or the airline? There is a big difference. If it was the holding company that made the purchase and the clause does not apply to the holding company it is worthless.

 

[Beetle007]

Does the clause apply to the holding company or the airline? There is a big difference. If it was the holding company that made the purchase and the clause does not apply to the holding company it is worthless.

I guess you didn't read that court's ruling that I posted. Here is the court's interpretation of the the holding company issue in regard to Midwest and Republic:

Under McCaskill-Bond, a “covered transaction” is a “transaction for the combination of multiple air carriers into a single air carrier.” § 42112, note, § 117(b)(4).3 An “air carrier” is defined as an “air carrier that holds a certificate issued under chapter 411 of title 49, United States Code [49 U.S.C.A. § 41101 et seq.].” § 42112, note, § 117(b)(1). The Teamsters argue that RAH’s July 2009 purchase of MAG was not a covered transaction because RAH and MAG are (or were) holding companies of certificated air carriers, not air carriers themselves. However, the amendment does not require that the transaction be between two air carriers. Instead, the amendment only requires that the transaction be “for the combination of multiple air carriers into a single air carrier.” § 117(b)(4) (emphasis added). If it can be said that the transaction at issue was “for the combination of multiple air carriers into a single air carrier,” (i.e., a “covered transaction”) (discussed in more detail below), then it can also be said that the transaction was one “involving two or more covered air carriers . . .” § 117(a) (emphasis added); § 117(b)(2) (term “‘covered air carrier’ means See D. 17-1, Declaration of William Wilder, Exhibit A, October 5, 2009 Letter 4 to NMB at 2 (“Once those steps are taken, [RAH] will surrender its ‘RW’ designator code currently possessed by Republic Airlines, one of its existing subsidiaries, and will request that IATA reissue [Midwest’s] YX code to Republic Airlines. RAH will then seek permission to operate Republic Airlines as ‘Republic Airlines d/b/a Midwest Airlines’”). An air carrier that is involved in a covered transaction”) (emphasis added). The fact that the transacting parties were holding companies, not air carriers, is not dispositive.​

 

[Beetle007]

Even if they are ment to stay apart, they are still separate. If at any time they are merged/combined, this is a new transactional event and should be covered by McKaskill-Bond.

I agree with you 100%. However, the courts are going a different direction and making the Midwest employees prove that the purpose of the original transaction was to combine the airlines. This is a very dangerous concept because it shouldn't matter if the purpose was to keep them separate or to combine them. Please read the court's opinion below:

The Teamsters also argue that the transaction was not “for the combination of multiple ​

air carriers into a single air carrier” because RAH kept Midwest’s operations separate until Midwest ceased operations in November 2009. Even if Midwest was operated separately for a period of time, RAH eventually combined Republic aircraft and management personnel with Midwest’s brand name, routes, employees (except flight attendants) and code-share arrangements with other airlines. Midwest surrendered its certifications, and Republic Airlines became certified by the FAA and IATA to operate “Republic Airlines d/b/a Midwest” using Midwest’s former “YX” designator code. Accordingly,multiple air carriers (Republic Airlines and Midwest Airlines), each with their own certificates under 49 U.S.C. § 41101, were ultimately combined into a single air carrier with one certificate – Republic Airlines d/b/a Midwest (MWA).4 At that point, Midwest Airlines no longer existed as a separate air carrier.

The Teamsters cannot seriously dispute that Republic Airlines and Midwest Airlines were eventually combined into one air carrier. However, the foregoing does not necessarily mean that the RAH-MAG transaction was “a transaction for the combination of multiple air carriers into a single air carrier.” For McCaskill-Bond to apply, it must be shown that the purpose of the transaction was to combine multiple air carriers into a single air carrier. Neither party adequately explores this facet of the statutory definition in their briefs and submissions. The Court can only note that there is evidence in the record supporting both sides of this issue. For example, RAH knew about Midwest’s financial difficulties before purchasing MAG in July 2009. Presumably, RAH also knew that Midwest was due to lose its fleet of aircraft. These facts suggest that RAH purchased Midwest intending to eventually, if not immediately, combine Midwest Airlines and Republic Airlines into a single air carrier. On the other hand, the official stance at the time of the transaction was that Midwest would continue to operate as a branded carrier. It was not until after the transaction took place that RAH commissioned an independent financial advisory firm, which determined that Midwest was insolvent and would continue to lose money. Even if RAH was only confirming what it already knew before and at the time of the transaction, it is at least plausible that RAH purchased Midwest intending to continue operating it as a separate entity. Accordingly, there is a genuine issue of material fact regarding whether the purpose of the RAH-MAG transaction was to combine multiple air carriers into a single air carrier.​