Officials at Delta Air Lines’ pilots union, the Air Line Pilots Association (ALPA), are meeting this week in Atlanta to discuss the possibility that the carrier may soon be involved in industry consolidation, and to form a three-member merger committee to ensure the group’s needs are met in the event of a tie-up.
The announcement, made by Delta ALPA’s master executive council (MEC) chairman Lee Moak, comes as industry speculation that Delta is a merger target for other US majors reaches fever pitch.
SkyTeam member Delta has long been considered a solid prospect for a merger. US Airways in 2006 made a takeover offer for Delta, but the plan was ultimately rejected.
However, Delta’s new CEO Richard Anderson set tongues wagging again in October 2007 when, during an earnings conference call, he said: “This industry, including Delta and candidly all of the major network carriers, are products of consolidation, and we fully expect this evolution toward a more consolidated industry will continue.” He added that consolidation “could make sense for Delta, if done profitably”.
In a January 9 message to Delta ALPA members, Moak says: “While we have been hearing about ‘inevitable consolidation’ for many years, it is becoming increasingly difficult to discount these facts and other recent events as simply more rhetoric. Consolidation may indeed be at our door.
“How we face its challenges will have a significant impact on our careers and profession for decades to come.”
In November, the MEC unanimously voted to retain a merger fund, which was initially authorized and funded by Delta pilots early in the carrier’s 2005 bankruptcy filing and now has a balance of over $1 million. “While the bankruptcy threat is now behind us, the potential for a consolidating event is every bit as real,” says Moak.
Although Delta’s ALPA chapter does not oppose consolidation, the union says such a tie-up “would need to produce an even stronger and growing airline that will vigorously and successfully compete in the international marketplace for years to come, will adequately reward the pilots for their participation as stakeholders in the transaction, and will provide the necessary platform for long-term growth in pilot earnings and career progression”.
It notes that any attempt at consolidation “will fail without the active involvement and support of the pilots from the earliest formative stages of the effort”.
That full consolidation cannot be truly reached until pilot groups are merged is a situation that US Airways has been forced to face. The carrier, which merged with America West Airlines in September 2005, received a single operating certificate from the US FAA in September. Nonetheless, its major labor groups, including the pilots, continue to work under terms of transition agreements reached after the merger, a fact that has created growing labor strife at the airline.
A legislative movement now underfoot may also make some pilots pause before supporting an airline merger.
Missouri Senators Claire McCaskill and Kit Bond tabled legislation – now signed into law - that provides for binding arbitration to determine the make-up of combined seniority lists when carriers merge.
American Airlines’ pilots union, the Allied Pilots Association (APA), has expressed its concern. “While this legislation is no doubt well-intentioned, APA does not favor legislative branch involvement in any aspect of labor negotiations,” says APA president Lloyd Hill.
ALPA, on the other hand, applauds the new law. A spokesman notes that if two airlines merge, and their pilot groups are each represented by ALPA, the union’s seniority integration policy will still take precedent. The law also only applies to future mergers, he says.
Source: flightglobal.com's sister premium news site Air Transport Intelligence