Seniority Issues A Sticking Point
It seems earlier reports of a tentative consensus between
pilots at Delta Air Lines and Northwest Airlines regarding a merger
deal may have been premature... or, at least, a tad optimistic.
While both sides did, apparently, agree to basic terms of a
merger, the issue of how seniority lists at both airlines would be
combined remains unresolved, reports The Associated Press.
The blessings of the Delta and Northwest chapters of the Air
Line Pilots Association (ALPA) aren't necessary for a merger to
proceed... but chances are further talks wouldn't go far without
those approvals, and that puts the deal "in serious jeopardy," in
the words of one person close to the talks.
Of particular concern is how pilots who became part of
Northwest's ranks with that carrier's 1986 acquisition of Republic
Airlines would be treated. An arbitrator is still working out
seniority issues within Northwest over that deal.
"I think they obviously recognize that with an unhappy pilots
group, that could make the merger and integration process painful
and expensive," Dan Kasper, an airline consultant with LECG in
Cambridge, MA, told the AP.
One need not look far for an example of how not to
integrate two disparate pilot ranks. Pilots at US Airways and
America West opted to wait until after the announcement of a merger
in late 2005 to begin working on integrating the two sides
with a common contract; nearly three years later, no contract has
been reached, and some pilots at the former US Airways are angling to toss out ALPA in
disgust.
The boards of directors at Delta and Northwest met separately
last week, to consider a merger. A formal announcement of a deal
was expected soon afterward... but it's now evident both sides have
postponed talks, until pilots sort their issues out.
John D. Kasarda, a management professor at the University of
North Carolina's Kenan-Flagler Business School, said it's in the
best interest for both Northwest and Delta to hold off on a merger
announcement. "One more week to resolve a pivotal issue would
generate far greater returns to both airlines," said Kasarda. "I
think Delta and Northwest are very astute for getting that issue
resolved."
There is a problem with that plan. If pilots don't agree on
seniority issues within the next week... there's a chance a
Delta/NWA deal could fall apart completely.