If Mergers Happen, They Want A Seat At The Table, Too

Amid rumors of possible airline mergers, airline unions are taking steps to ensure their interests are protected in the increasingly likely event a merger takes place. Though all parties involved remain silent, it's increasingly evident Delta Air Lines Inc. has formally initiated merger talks with Northwest Airlines Corp. and United Airlines parent UAL Corp, reports The Detroit News.

At Northwest, pilots and flight attendants say they would support a combination with another carrier if employees get an ownership share in the new company. Gary Rizzuto, pilots’ union spokesman for Northwest, said they activated their merger committee late last year as merger rumors began to circulate.

As ANN previously reported, merger rumors were heightened last November as investment group Pardus Capital Management pushed publicly for such talks, citing rising fuel costs and competition. Pardus owns significant shares of both Delta and United.

Northwest’s pilot leaders say they could support such a merger, depending on the identity of the other airline and labor terms of the deal. Airline employees fear that consolidation could result in fewer jobs and loss of seniority, which is especially important for pilots’ work schedules and pay scales.

Northwest’s flight attendants have said they will demand job protection and more pay, as well as part ownership of any new company that results from a merger. These actions have led to flurry of similar activity among other unions this week.

Continental Airlines pilots decided to activate their merger task force last Thursday, so they would not be caught off guard. Tom Donaldson, head of the Airline Pilots Association at Continental, said Friday the pilots would be happy if the Houston-based airline remains as-is, but they want a seat at the table if Continental gets caught up in merger mania.

"We want to be a significant player in any negotiations for a merger," Donaldson said.

Pilots sent a letter to Continental Chairman and CEO Larry Kellner regarding the union’s position, he said. Continental had no comment Friday on the move by the pilots union.

Robert Roach of the International Association of Machinists and Aerospace Workers said that all airline workers need to be protected in the event of a merger.

"We believe that mergers would have an adverse impact on the flying public, which would affect our members," Roach said. "The employees at all these carriers have taken significant wage and benefits cuts."

Analysts have said that the labor unions could use consolidation to recover some of the wage and benefit concessions they gave from 2001 to 2005 as carriers suffered huge losses. Aviation consultant Mike Boyd thinks much of the merger activity is being promoted on Wall Street by companies looking to make money off such a deal.

Kevin Mitchell of the Business Travel Coalition agrees, saying a traditional merger would only be a short-term fix... resulting in bigger airlines with the same big problems.

"In this case, it is a small handful of Wall Street types and investor types that are driving this," he said. "It is all about getting the stock price up, get hundreds of millions in fees, then they walk away."

FMI: www.nwa.com, www.delta.com, www.continental.com