April 8, 2008, 4:24 pm
Delta-Northwest: Pilots Need Not Apply
Posted by Heidi Moore
Here is some incentive for those pilots to work out the seniority lists in the talks between Northwest Airlines and Delta Air Lines: airline jobs are disappearing.

Four airlines have ceased operations in the past week: Aloha Airlines, ATA, Champion Air and Skybus Airlines. They were hit by the price of oil and the pressure of competing with larger, more diversified airlines–some of whom recently emerged from bankruptcy-law protection themselves. Avondale Partners analyst Bob McAdoo said this week there might be at last one more to fall: Virgin America. And Merrill Lynch noted this week that Sun Country Airlines has “announced plans to furlough almost 30% of its pilots, effective May 1. While the carrier currently plans to recall these pilots on October 31, we think that could be wishful thinking if the macro backdrop does not see material improvement by then.”

What does this mean for the economics of the airline industry? French investment bank Calyon expects the global industry to post losses of as much as $1 billion this year. And Merrill Lynch noted that many of the big airlines are cutting capacity–Delta, for instance, is cutting capacity 5%, and, as a result of the reduced flying, is looking to shrink its employee rolls by 2,000.

As for the bankruptcies, Morgan Stanley airline analyst William J. Greene said in a research note this week that larger airlines including Delta may benefit from the closure of Skybus, which was a competitor in Columbus, Ohio.

While fewer airlines mean less choice and potentially higher fares for consumers, the ones who might be really worried are the pilots who are holding up Delta’s talks with Northwest over the issue of coordinating pilot seniority lists. The innovative talks are putting labor before an actual merger agreement, but they have hit multiple snags. Delta, in a game of high-stakes chicken, has asked for its pilot-seniority system to prevail. The two sides are in something of a hurry, because of potential regulatory resistance when the clock runs out on the Bush administration.

Recently, the WSJ reported that Delta is considering pushing ahead with a deal with Northwest without an agreement on pilot seniority. Whether this was just a warning shot to pilots or not, the pressure is clearly on pilots now to help this deal along. After all, it doesn’t look like anyone else is hiring.

Permalink | Trackback URL: http://blogs.wsj.com/deals/2008/04/0...log/trackback/
Save & Share: Share on Facebook | Del.icio.us | Digg this | Email This | Print
Read more: Deal Dissection, The Deal

 

You must run in different circles than I. A majority of the people I talk to, both Delta and NWA, think that a merger is probably in the best interest of both companies. My guess is that it is the senior pilots at both Delta and Northwest are the ones against this merger because they are afraid of the unknown (ie. where their seniority will end up in the new company). Being a relatively new hire at Delta, I think a merger will be in the best interest of the company in the long term. The opportunities for all of us in a 'global' airline will be a benefit for all of us.

It would have been better if the MEC's could have come to an agreement beforehand, but maybe they are stuck in the old paradigm of waiting until the merger is official before they realize they better work something out (or go to court over it). Hopefully they can get together without arbitration because it looks like something is coming soon!

 

Listen my friend, stop trying to be reasonable.......

How is it going HVY? Say hi to Howie for me.

Slinky

 

Exactly. With the price of jet fuel the way it is (and it is not coming down), and the current state of the airline industry, Delta and Northwest cannot afford to pass this opportunity up.

I only hope Delta and Northwest pilots are able to come to a deal before Delta/Northwest management decides to proceed with the merger without pilot support (and without their proposed 30% pay raise).


Everyone complains that airline management is stupid because they are parking aircraft instead of raising ticket prices. They can't raise ticket prices because there is hardly any pricing power. Just look at how many times each airline has attempted to raise fares just $5 in the past three years. For every single $5 increase that sticks, at least five others were repealed. If Delta and Northwest merge, United and Continental will be allowed to merge. This may set off a few smaller mergers amongst majors/LCC's. Then we will be left with a few major airlines controlling the majority of the market share. Airlines will then have much more pricing power. They will pass the increase of fuel prices onto the customer, and airlines will make money (and that is good for a union).

So Delta and Northwest pilots who are afraid of losing just a little bit of seniority, would you rather be 40% on a list of one of the six legacy carriers, or would you rather be 45% on the world's largest, strongest, and most able to compete carrier.

So just come to an agreement already (how about baseball arbitration) before Delta/Northwest management go ahead with the merger without pilot support (and without the 30% pay raise).