Unions prep for UAL deal
By Julie Johnsson
Crains Chicago Business
Aug. 21, 2006
As UAL Corp. CEO Glenn Tilton beats the drum for airline consolidation, United Airlines unions are girding for a merger.
The Air Line Pilots Assn., which represents United's pilots, told its members in a recent letter that its leadership team is "well into its strategic planning" on merger issues. The Assn. of Flight Attendants has a team of outside advisers on standby, should the airline announce a deal.
And the union representing United's 17,000 customer service agents and ramp workers has assembled a 12-person task force of labor experts, economists and lawyers to study every possible merger combination — and the labor strife each scenario would likely engender.
"We're preparing ourselves for any situation that might come up," says Robert Roach Jr., who handles airline contract negotiations as general vice-president for the International Assn. of Machinists and Aerospace Workers.
The unions' planning reflects widespread belief that sky-high fuel prices and the threat of a recession will force airline mergers — and that United will be a part of the deal-making.
"United's management does want to merge the company; that's very clear," says Michael Boyd, president of Boyd Group, a Colorado-based aviation consulting firm. "The unions should be talking about contingency plans. In an airline merger, employees and consumers lose and the investors win."
A spokesman for Elk Grove Township-based United declines to comment on speculation about a merger.
Each of the unions is readying to navigate the stormy labor issues that accompany a major airline deal: guarding seniority; reconciling different pay scales, pensions and health care benefits at the merging carriers; and ensuring that a rival union doesn't encroach on their turf.
United's unions were caught off guard when UAL attempted a merger with US Airways six years ago — a deal they eventually helped scuttle. With consolidation rumors swirling again, they're determined to be ready.
"We learned that we need to be . . . proactive about the way we're dealing with those potential business decisions," says a spokeswoman for United's flight attendants union.
CHANCE TO RAISE MONEY
Doing a deal would give United an opportunity to raise equity from outside investors, which it badly needs to purchase planes and fully leverage its international network.
What's more, Mr. Tilton is the industry's most vocal advocate for lifting regulatory barriers to big mergers and foreign investment in airlines. "It seems that when Glenn Tilton appears in public, he mentions industry consolidation," Air Line Pilots Assn. officials wrote to members this summer. The union didn't comment on its merger planning.
POTENTIAL PARTNERS
While recent industry chatter has fingered Texas-based Continental Airlines Inc. as a likely merger partner for United, some industry insiders view Atlanta's Delta Air Lines Inc. as likelier. United and Delta's hubs and networks match up nicely, and they came close to merging in the late 1990s.
"Delta is focused on completion of its restructuring plan and emerging from bankruptcy as a stand-alone airline sometime in mid 2007," says a Delta spokesman.
Says a Continental spokeswoman, "We've said repeatedly that our preference is to grow alone and avoid the problems that mergers bring."
Another unifying factor could be James Sprayregen, who served as United's lead counsel through its three-year bankruptcy before leaving in June to head the restructuring practice at New York's Goldman Sachs & Co. Now, at Goldman, he is advising Delta on its bankruptcy proceedings.
Mr. Sprayregen declined to comment.
©2006 by Crain Communications Inc.
By Julie Johnsson
Crains Chicago Business
Aug. 21, 2006
As UAL Corp. CEO Glenn Tilton beats the drum for airline consolidation, United Airlines unions are girding for a merger.
The Air Line Pilots Assn., which represents United's pilots, told its members in a recent letter that its leadership team is "well into its strategic planning" on merger issues. The Assn. of Flight Attendants has a team of outside advisers on standby, should the airline announce a deal.
And the union representing United's 17,000 customer service agents and ramp workers has assembled a 12-person task force of labor experts, economists and lawyers to study every possible merger combination — and the labor strife each scenario would likely engender.
"We're preparing ourselves for any situation that might come up," says Robert Roach Jr., who handles airline contract negotiations as general vice-president for the International Assn. of Machinists and Aerospace Workers.
The unions' planning reflects widespread belief that sky-high fuel prices and the threat of a recession will force airline mergers — and that United will be a part of the deal-making.
"United's management does want to merge the company; that's very clear," says Michael Boyd, president of Boyd Group, a Colorado-based aviation consulting firm. "The unions should be talking about contingency plans. In an airline merger, employees and consumers lose and the investors win."
A spokesman for Elk Grove Township-based United declines to comment on speculation about a merger.
Each of the unions is readying to navigate the stormy labor issues that accompany a major airline deal: guarding seniority; reconciling different pay scales, pensions and health care benefits at the merging carriers; and ensuring that a rival union doesn't encroach on their turf.
United's unions were caught off guard when UAL attempted a merger with US Airways six years ago — a deal they eventually helped scuttle. With consolidation rumors swirling again, they're determined to be ready.
"We learned that we need to be . . . proactive about the way we're dealing with those potential business decisions," says a spokeswoman for United's flight attendants union.
CHANCE TO RAISE MONEY
Doing a deal would give United an opportunity to raise equity from outside investors, which it badly needs to purchase planes and fully leverage its international network.
What's more, Mr. Tilton is the industry's most vocal advocate for lifting regulatory barriers to big mergers and foreign investment in airlines. "It seems that when Glenn Tilton appears in public, he mentions industry consolidation," Air Line Pilots Assn. officials wrote to members this summer. The union didn't comment on its merger planning.
POTENTIAL PARTNERS
While recent industry chatter has fingered Texas-based Continental Airlines Inc. as a likely merger partner for United, some industry insiders view Atlanta's Delta Air Lines Inc. as likelier. United and Delta's hubs and networks match up nicely, and they came close to merging in the late 1990s.
"Delta is focused on completion of its restructuring plan and emerging from bankruptcy as a stand-alone airline sometime in mid 2007," says a Delta spokesman.
Says a Continental spokeswoman, "We've said repeatedly that our preference is to grow alone and avoid the problems that mergers bring."
Another unifying factor could be James Sprayregen, who served as United's lead counsel through its three-year bankruptcy before leaving in June to head the restructuring practice at New York's Goldman Sachs & Co. Now, at Goldman, he is advising Delta on its bankruptcy proceedings.
Mr. Sprayregen declined to comment.
©2006 by Crain Communications Inc.
uke:Merger talk for ANYONE with CAL would be a Losing deal for Continental. They are doing GREAT without anyone else.....let alone all of those "Crap" A320's that United has! Run AWAY CAL....Run AWAAAAAYYYYYY!!!!!!
