No horse for me in this issue, but as an ex-ALPA member I am saddened by this as I see some similarities with the USAir merger problems.
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Union chief Lee Moak had key merger role
By TAMMY JOYNER, MATT KEMPNER
The Atlanta Journal-Constitution
Published on: 04/20/08
At an employees event that was more celebration than meeting last week, Delta's top officers heaped praise on an unlikely ally of management.
Pilots union boss Lee Moak, an ex-Marine fighter pilot, strode to the podium dressed in a crisp airline captain's uniform and unabashedly soaked up the applause.
Delta executives credit Moak and his lieutenants in the Delta pilots union with salvaging a foundering merger deal and driving forward creation of the world's biggest airline. They expect to rely on him to help sell politicians and regulators on the $17.7 billion deal.
Moak, who turns 51 today, charted what industry observers call an unprecedented strategy for airline labor. But detractors say it betrayed fellow union pilots at Northwest.
Rather than waiting for management to fashion a deal and then present it for union approval, Moak's team seized an influential role early on.
First, top executives of both airlines waited for Moak's team to work out an agreement with Northwest pilots on seniority matters that control pay, routes and other working conditions. When that approach failed, Moak cut a new labor deal directly with Delta. That allowed the merger to be announced last week but stranded Northwest pilots on the sidelines.
Ed Bastian, Delta's president who has worked closely with Moak, lauded the union chief's initiative.
It "takes courage and it's a lot of risk," Bastian said, noting that the turning point came in the past two weeks when the Delta pilot leadership "stepped up and said they were willing to do a deal" on their own. "Had they not expressed a willingness to do that, it would have caused us real pause as to whether we should proceed," Bastian said.
Moak's strategy came at a price. He enraged Northwest pilots, who felt he undercut them when Delta pilots made their own deal with management. Right now, Delta pilots will get a 3.5 percent equity stake in the new airline. Northwest pilots have no agreement and no equity.
Shortly after the merger announcement last week, the head of the Northwest pilots union called Moak's actions "very unfortunate." Both groups are part of the Air Line Pilots Association.
David Stevens, the chairman of Northwest's pilot group, declined to comment for this story. But in a recent letter to members, he wrote, "The Delta pilot leadership and Delta management have made an arrangement to try to disadvantage the Northwest pilots economically and with respect to our seniority."
He added that "no amount of money can sustain a carrier which creates this level of discord. This is a recipe for failure."
With such bad blood, Moak faces another challenge. Can his team fashion peace with its detractors and avoid protracted ill will among Northwest pilots that could torpedo the merger's promise?
"If he can do that, he's Superman," said Ted Reed, a veteran aviation reporter in Charlotte who covers the industry for TheStreet.com.
Moak predicted, "Northwest pilots will be on board shortly. It's a temporary problem and we'll work through it together."
Planning ahead
Moak assumed the pilot group's top job in a closely contested race just as Delta headed into bankruptcy in 2005. A tough-talking Moak defiantly pronounced to his fellow pilots: "We will not be victims."
Before long, though, Delta dumped its pilot pension plan — forcing a takeover by a federal agency. Moak accused Delta management of "bullying tactics" but eventually agreed to additional pay cuts, though less than what the company had asked for a judge to impose.
Moak searched for ways for the pilots to control their own future.
The union and other employees teamed up with management to help crush US Airways' attempted hostile takeover of the airline. But all along, Moak's team prepared for consolidation. His group raised $1 million to analyze the prospects for mergers. The union quietly hired merger and acquisition lawyers.
"What we decided to do is prepare and become a driver or partner" in the event of a merger they could back, Moak said last week. "Everyone would prefer standalone. But economics today do not allow that."
"We talked to everybody we could find who owned Delta stock and said that we would be involved in any process that involved Delta," he said.
In recent weeks, Moak grew more resolved as he watched oil top $110 a barrel and several smaller airlines fail or file for bankruptcy.
"Time was running out," he said. "That was the catalyst for moving things forward."
Moak's strategy is rare for a union leader, said Les Hough, a labor relations expert.
"It's unprecedented" for a union leader to cut a deal with management that leaves out members of the same union, said Hough, the former director of Georgia State University's Usery Center for the Workplace. And it's unusual for union leaders to have such an influential role in shaping a merger, he said. Generally, they oppose combinations because of the job losses that ensue.
The closest situation Hough said he could recall was in the 1970s, when United Auto Workers chief Doug Fraser worked in tandem with Chrysler executives to save the auto maker during a recession and soaring oil prices.
"Fraser was accused at the time of being in bed with management," Hough said. "As it turns out, it turned out very well for Chrysler. There's a case to be made for extraordinary actions such as Moak is taking."
Moak makes no apologies for his decisions.
"We didn't sit back on the sideline and whine, which is what I see in many businesses and industries," he said. "We're ahead of it. We were productive. We helped craft the final product."
That philosophy is the underpinning of the way he operates.
"He can't stand to let things go undone," said FedEx pilot Brady Muth, a hunting buddy who served in the U.S. Naval Reserves with Moak.
"He's the kind of guy who thinks if you want it done right, you do it yourself," Muth said.
What some see as decisive, others view as autocratic.
"There is an arrogance and condescending attitude toward the pilots group," said Mike Stark, a Delta captain in Marietta who helped lead a recent unsuccessful campaign to oust union leaders.
Stark said Moak's style is, " 'We know better. When we think you need to know something we will let you know what it is.' "
Moak has been criticized by some pilots for keeping them in the dark at key moments. At the same time, Stark said, Moak failed to get pilots enough pay and benefits from Delta executives. "A lot of us have observed what we feel is a too cozy relationship with Delta management."
Stark said Moak and his team have gone to social events with Delta bosses, including president Bastian's birthday party last year. Many labor leaders would eschew such events, viewing it as inappropriate for people in their position.
Moak dismisses such complaints.
The union group, which represents 6,000 Delta pilots, helped craft a merger that gives employees and the company "a substantially viable future," he said. "If that's what they want to call 'chummy,' that's what it is. Bottom line, look at the results and what we've achieved for everyone."
The role of union leader isn't particularly rewarding, said Reed of TheStreet.com. "It's a horrible time for airlines. He decided this was the best way to do what he can for his members."
The job follows Moak everywhere, whether at his home in New Orleans, on routes to Europe he still flies for Delta or during what's supposed to be his down time.
Muth remembered being in a duck hunting blind at
5:30 in the morning in Louisiana when Moak's union cell phone went off.
"He can never get away from it," Muth said.
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