More news out today-
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 02/26/08
Opposition to a merger between Delta Air Lines and Northwest Airlines keeps growing the longer the proposed deal takes.
As talks between the two carriers' pilots unions on seniority rules dragged out, another union that represents many employees at Northwest on Monday said it will oppose any merger.
The International Association of Machinists and Aerospace Workers said it is joining with a passenger rights group to oppose any mergers by big airlines. The union represents baggage handlers, ticket agents and other employees at Northwest, United and Continental Airlines, but not at Atlanta-based Delta, which is largely non-union.
"Employees and passengers are the two groups essential to an airline's success, yet they are the ones that are most hurt in mergers," Robert Roach Jr., the union's general vice president, said in a statement Monday. "Airlines must work with employees and cater to passengers if they expect to succeed."
Meanwhile, an announcement of the proposed merger deal remained on hold Monday while the Delta and Northwest pilot unions, both units of the Air Line Pilots Association, tried to resolve differences on how to combine their 11,000 pilots. The two ALPA units' leadership committees met last week without taking any action.
Plus, the value of each airline's shares have declined, which lowers the price tag of what would be an all-stock deal. Most airline stocks rallied on Monday, but Delta and Northwest shares fell slightly. Shares of United Airlines — openly on the hunt for a merger — also dropped.
Such developments could bring new headaches to the would-be merger's executive architects, who were hoping a pilot pact would reduce the potential for political opposition and delays in integration.
The machinists union said Monday that it will work with the Coalition for an Airline Passengers Bill of Rights to lobby against a wave of airline megamergers that could be kicked off by a deal between Delta and Northwest, the nation's third- and fifth-largest carriers. Kate Hanni, a former real estate agent from Napa, Calif., founded the grassroots organization after she was stranded for several hours last winter on an American Airlines flight.
Pilots union negotiators at Delta and Eagan, Minn.-based Northwest have worked out most terms of a pact that would allow them to get about a 7 percent equity stake in the combined companies, according to a senior Delta pilot and other people briefed on the pilot union negotiations. Northwest pilots would get about a 30 percent pay raise, while Delta's higher-paid pilots would get a modest pay hike, said one person briefed by people with knowledge of the deal.
Still, the two unions apparently remained at loggerheads over combining their seniority lists. Seniority determines most aspects of a pilots' career, from size of paycheck to how likely he or she will get laid off or have to work during holidays.
The Delta pilot briefed on the talks said Northwest's negotiators insisted on so-called "fences" to reserve some of the highest-paying jobs flying its big Boeing 747s for its members. The Northwest union also wants a scheme that would push thousands of Delta's pilots to the bottom of the seniority list, according to reports by the Associated Press and Minneapolis Star-Tribune. Delta's pilots generally have lower seniority than Northwest's because of a wave of early retirements by Delta's senior pilots before the carrier filed for bankruptcy in 2005.
Northwest's approach would run counter to the way Delta and its pilots union have merged pilots' seniority lists in earlier acquisitions. In mergers with Western Airlines in 1986 and part of Pan American World Airways in 1991, Delta blended the pilot groups in proportion to their relative size rather than strictly by date of hire.
The Delta and Northwest pilot unions have "two different philosophies," said Rich Terry, a Boeing 767 captain who has worked more than two decades at Delta. "In some ways, they're talking two different languages with this stuff."
Terry said he believes a merger of Northwest's Asian routes with Delta's European network will result in a stronger company. "When you look at the two route systems, it's hard to argue that it doesn't make a lot of sense," he said.
But there are signs of revolt among some Delta pilots who are unhappy about their union leaders' decision to go along with Delta's merger plans. Delta pilot Mike Stark and other members are seeking a recall of the four union leaders who head the union unit that represents about 4,000 Atlanta-based pilots.
The officials "have condoned secret negotiations and have already given their conditional approval to a merger with another airline" without consulting pilots, Stark said in his petition. He said the proposed merger could cause hundreds of pilots to lose their jobs. The group hopes to eventually recall the union's chairman, Lee Moak, but it's unclear how much support the group has.
Terry said he doesn't have a problem with the union's approach to the merger-related negotiations. "I think it's a practical idea," he said. "You can't negotiate something like this with 10,000 guys putting in their two cents."