Believe They Would Pay For Merger's Purported Savings
US Airways Group's
(USAG) unsolicited $8 billion takeover bid for bankrupt Delta is
meeting strong resistance from Delta's employee unions.
Employee representatives are skeptical the merger can go forward
without layoffs. One of the ways USAG says the merger will save
money is to eliminate routes and planes in markets where the two
airlines currently overlap in competition.
Bill Morey, a member of the Delta Board Council representing
some 40,000 employees told CNN, "Delta people feel that we have
worked so hard and sacrificed so much to get Delta to the point
where we are about to emerge from bankruptcy. Now we have someone
coming in that's trying to usurp all that."
The airline's pilots are also speaking out. Air Line Pilots
Association (ALPA) chairman Lee Moak has taken a strong stand
against USAG's bid. ALPA is Delta's largest labor union. It also is
one of the airline's creditors holding the note on a fair portion
of the its unsecured credit.
In a strongly worded letter to ALPA's 6,000 Delta pilots Moak
said, "On the surface, (it) appears to lack any substantial benefit
for Delta, its employees, our communities, or our customers. Should
this merger be as misguided and as poor an idea as I currently
believe it to be, then I will deploy every available resource to
stop it."
USAG maintains its merger plans don't include job cuts.
Company representatives pointed to the 700 recalled pilots since US
Airways merged with America West to form USAG just over a year
ago.
Delta's management and labor seem to be singing the same tune
for a change. Management is voicing some of the same concerns as
airline employees. Management is also concerned however about the
time factor.
Delta CFO Ed Bastian last week said cost savings without layoffs
doesn't add up. He also says USAG's proposal to borrow $7 billion
from Citigroup to finance the deal means Delta would exit
bankruptcy owing $18 billion. But, he said, the biggest problem is
delay. A required Justice Department review of the proposed merger
would likely mean another year in bankruptcy for Delta.
Delta's plan to emerge from bankruptcy next year is contingent
on its ability to secure credit. A change in the economy, fuel
prices or other disruption of travel during any delay would make
the airline too risky to get the needed credit.