Delta, Northwest Could Unveil Merger as Early as Tuesday
By Susan Carey and Paulo Prada
Word Count: 1,131 | Companies Featured in This Article: Delta Air Lines, Northwest Airlines
Delta Air Lines Inc. and Northwest Airlines Corp. have spent the last week readying their long-delayed merger announcement, with the aim of unveiling it as early as Tuesday, said people familiar with the matter.
They could go ahead without the support of Delta's 6,000 pilots. Delta and its pilots remained in talks over the weekend on a new post-merger contract that would cover that group only, leaving negotiations with Northwest's 5,000 pilots for a later day, these people said.
3 comments:
Ben Dover will be the new CEO...
Here's what wsj says about Delta/Pilots negotiations, but I am sure there is better info on the grapevine:
Pilots' Seniority
Seniority is important because it dictates which kinds of planes pilots fly and whether they are captains or first officers, both determinants of pay and lifestyle. Northwest pilots tend to be more senior because hundreds of veteran Delta aviators quit before Delta filed for Chapter 11 in 2005.
Without an accord on seniority, Delta and Northwest wouldn't be able to reap the scheduling, fleet and operating efficiencies they had hoped for on deal consummation. Many in the industry point to the example set by US Airways Group Inc. and America West Airlines when they merged in late 2005. Only in recent days have some of the unions representing their ground workers been able to win common labor contracts with the combined carrier. The pilots still are fighting over seniority, which has kept US Airways from integrating the two fleets and the cockpit-crew roster, resulting in inefficiencies and lost savings.
Delta and Northwest decided they couldn't afford the significant costs of the joint pilot contract, which would have given raises to all the aviators, with large ones for the lesser-paid Northwest pilots. After a lull, Northwest late last month proposed to Delta that the two revive the plan but without a pilot agreement, leaving it to the employees to work out seniority issues later and then bargain for a new contract with the combined company. That is the way most merging airlines approach labor integration, but it's a difficult process that can take years.
Instead of jettisoning a labor-friendly approach altogether, Delta in recent days tried to forge a deal with its pilots alone, hoping that an agreement with them would undo some current contract language that would hinder the combined airline's flexibility in the first phase of the merger. Delta also wanted to insure harmonious relations with its only large unionized group.
A deal with the Delta pilots also was intended to give the Northwest group an incentive to quickly work out the seniority issue either through negotiation with the Delta pilots or via arbitration. In return, the Northwest pilots could look forward to a new contract of their own later that would raise their pay to Delta levels.
But talks between Delta and its pilots foundered last week over pay issues, said one person familiar with the situation. Because of the worrisome industry outlook, Delta suggested cutting back on the terms it had agreed to in February, which led to a breakdown in talks. Leaders of the Delta pilots' union were meeting in Atlanta over the weekend with Delta management in hopes of breaking the stalemate, said this person. As of Sunday, it appeared that the two sides were getting closer, this person said.
The Northwest pilots fear that in the initial phase of a merger, the combined airline would expand the Delta side of the operation and shrink the Northwest side. If the Northwest pilots believe a merger announcement is imminent, they could try to press Delta management to agree to expedited bargaining in return for the Northwest pilots not opposing the deal.
Basically, this is a shot across the bow of the NWA pilot group, letting them know that they are going to get the short end of the stick if they don't help settle this. The NWA pilots have been wanting the moon, but now see that they could be stuck in their present pay until their contract becomes amendable in 2012. Their pay is considerably lower that Delta's pilots, BUT they still their pension.
The tough pill for the Delta guys to swallow is losing their pension and taking a 33% pay cut and then watch it all being spent on bringing the NWA guy on the property, giving them a huge pay raise (while they still have their pension). when you throw in the seniority issue, it gets even uglier!! No matter how you slice it....this will be one UGLY merger as far as the two piot groups are concerned.
But that article brings to light why this is so important for the company to settle ASAP....they have to be able to re-arrange the combined fleet for maximum efficiency and cost savings..and that can only be done with consent by the pilot groups and their respective contractual language.
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