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.

FMI: www.delta.com, www.nwa.com, www.alpa.org