Delta/NWA back on?

[staplegun]

FT seems to think so:





Delta and Northwest revive merger talks
By Justin Baer and Francesco Guerrera in New York
Sunday Apr 6 2008 12:45

Delta Air Lines (NYSEAL) and Northwest Airlines (NASDAQ:NWAC) , two US airlines seeking to add scale in the face of a brutal industry-wide downturn, have revived their talks to merge, people familiar with the talks said.

Record fuel costs, competition and ebbing demand has ended the US industry's modest recovery, forcing carriers to slash flight schedules, park aircraft and impose fees on passengers. In the past week, three low-cost airlines - Aloha Airgroup, ATA Airlines and SkyBus - shut down operations.

Delta and Northwest had inched close to an agreement in February. Those negotiations stalled when their pilot unions failed to find common ground on how to rank members by seniority, which determines pay, rank and aircraft flown.

Executives at Minnesota-based Northwest have since put pressure on their counterparts at Delta to proceed without the pilots' support.

Delta's board members, who convened a meeting late last week to discuss the company's options, agreed to press ahead with negotiations, the people said. Those talks are now intensifying, with the two sides set to meet again this week, they said.

Delta and Northwest declined to comment.

As part of the previous talks, the two carriers agreed to swap Northwest shares for those of Delta at little or no premium, appoint Richard Anderson, Delta's chief executive, as the combined company's chief executive and keep the headquarters in Delta's hometown of Atlanta, the people said.

They also hammered out a new, $2bn labour accord that would have given pilots pay raises and a 5 per cent equity stake in a combined company.

But by late February, the two labour groups broke off negotiations without agreement. Representatives from each union met again in March to no avail, and Delta's pilots rejected the Northwest union's proposal to seek arbitration for a solution to the seniority stalemate.

Delta's public assurances that it would not proceed with any deal that would sacrifice job security and seniority benefits, along with the pilots' impasse, appeared to thwart the two airlines' plans. The companies had sought to line up the pilots' accord to help avoid the acrimony and protracted negotiations that often slows down airlines' effort to integrate.

The industry's outlook has since darkened, forcing Delta's executives and board members to consider leaving negotiations with the pilots until after they reach an agreement to merge.

Delta and Northwest each recently announced plans to trim domestic capacity, reducing the size of their fleets, to reduce costs.




Ugh!

Kevin

 

[Velocipede]

Of course they'll go ahead. They just gave the pilots a chance to settle the SLI issues in house. When they refused to do it, they'll just let them fight it out and, in the end, binding arbitration will settle the issue.

The problem is there will be hard feelings amongst the pilots until the last one on the property today retires. I got hired after a nasty list merger. Believe me, there are still pilots on our property holding grudges.

 

[Cav]

Of course they'll go ahead. They just gave the pilots a chance to settle the SLI issues in house. When they refused to do it, they'll just let them fight it out and, in the end, binding arbitration will settle the issue.

I'd say this is about right but I hope it doesn't come to binding arbitration. Time will tell. But you're about right, I don't think the talks ever really "died."

 

[Clocks]

Of course they'll go ahead. They just gave the pilots a chance to settle the SLI issues in house. When they refused to do it, they'll just let them fight it out and, in the end, binding arbitration will settle the issue.

The problem is there will be hard feelings amongst the pilots until the last one on the property today retires. I got hired after a nasty list merger. Believe me, there are still pilots on our property holding grudges.

And out of curiosity, what are the seniority choices? Staple, 1:1, 2:1? What is most likely to happen given previous mergers?

 

[Cav]

And out of curiosity, what are the seniority choices? Staple, 1:1, 2:1? What is most likely to happen given previous mergers?

A staple wouldn't make much sense. My guess is some sort of combination of 1:1 and DOH. Maybe some fences, who knows. That's the million $ question.

I know who will be on the bottom regardless of what happens

 

[surreal1221]

Just develop a single "Holding" company, and operate the two companies with seperately.

No need to merge the lists anymore, and keep them seperate.

 

[Maximilian_Jenius]

Just develop a single "Holding" company, and operate the two companies with seperately.

No need to merge the lists anymore, and keep them seperate.

While a novel idea, IMO it holds the potential of setting up a whipsaw. Lest there be some language involved to prevent it from occuring.

Whipsaw is not good on any level, but more importantly the mainline level.

 

[Velocipede]

DoH ain't happening. That's what the NWA guys essentially wanted. DoH is not part of the ALPA merger/frag policy.

So, it will be some sort of ratio deal, perhaps with widebody fences to protect those nebulous "career expectations."

 

[staplegun]

Just develop a single "Holding" company, and operate the two companies with seperately.

No need to merge the lists anymore, and keep them seperate.

Absolutely the worst possible scenario! Remember what Lorenzo did with Eastern and Continental?

Can you say, "Whipsaw?"

We'd be getting around this issue for years and years, and provide management endless opportunities to play us off like little lap dogs craving for attention. How do you think flying would be divided up for a new aircraft type, based on the difference in contracts?

In that scenario what's to prevent management from going to NWA and saying, "Hey boys, we have a bunch of 777's on order; if you agree to a lower rate we'll send them to the NWA side of the house..."




Kevin

 

[surreal1221]

Fair enough gents, but I neglected to recommend a "Fence" to control the whipsaw along with any additional language that each sides' ALPA could formulate to minimize the possibility of a Lorenzo (we are paying attention to history - which is great) type could bring.

Nevertheless, I have no dog in this fight - except to see the continued existance of Delta Airlines.

 

[kellwolf]

I read Surreal's post as sarcasm. 'Course maybe that's b/c I fly for an airline owned by a holding company with a potential whipsaw over my head. If that started happening at the major level, it would pretty much be the end of the profession as we know it.

 

[surreal1221]

Well Steve, it wasn't sarcasm. . .but rather a genuine idea I remember reading about in a trade paper a few days ago. I will accept full responsibility for my lapse of judgment and ignorance when it comes to that suggestion.

When I wrote the post about making a holding company, I honestly did not think about the whipsaw potential that would occur. I figured the two ALPA groups would figure it out - and realize that the potential WAS there, and that accordingly they would need to make it extremely clear in whatever new document the two organizations utilize to protect BOTH pilot groups from a whipsaw - if that means fences to protect "career expectations" then so be it, especially if it preserves the pilot jobs at NWA and the pilot jobs at DAL.

Also, before my "...continued existence of Delta Airlines" is taken out of context as well, I say that not for my career (perhaps partially) but more for my father who is coming up on 20 years with the company, who has dodged three lay-off attempts.

 

[kellwolf]

Problem is, two separate ALPA groups can be turned at each others throats by management. I point you to US Airways/America West. Not necessarily turned at each other by management, just career expectations. Imagine what kind of a frenzy that would be if management was intentionally pitting them against each other.....

 

[surreal1221]

Oh I know that possibility exists. . .BUT. . .I would hope (*gasp*) that we have some more stable minds at both NWA and Delta than at US Airways.

But, perhaps that is assuming too much. Establishing fences NOW, prior to a forced merger or heck - even shortly afterwards, wouldn't be too terribly bad in my mind.

Plus, let us not forget the fact that the uSAPa group are the ones causing the drama by not following the arbitrators ruling.

But I know I know. . .we all could, at any point, want to take our ball and go home.

 

[Maximilian_Jenius]

Absolutely the worst possible scenario! Remember what Lorenzo did with Eastern and Continental?

Can you say, "Whipsaw?"

We'd be getting around this issue for years and years, and provide management endless opportunities to play us off like little lap dogs craving for attention. How do you think flying would be divided up for a new aircraft type, based on the difference in contracts?

In that scenario what's to prevent management from going to NWA and saying, "Hey boys, we have a bunch of 777's on order; if you agree to a lower rate we'll send them to the NWA side of the house..."




Kevin

Beat ya to it Kevin!

 

[kellwolf]

Oh I know that possibility exists. . .BUT. . .I would hope (*gasp*) that we have some more stable minds at both NWA and Delta than at US Airways.

Steenland and NWA are notorious for union busting. They'd jump at the chance.

 

[surreal1221]

Yes they are. . .and yes they would.

Anyone have any information as to how the upper level management shake down would occur?

Nevertheless, Steenland has his window of opportunity coming up to take his parachute and jump off. In a way, I'd love to see him float away. . .but I'm sure that 7.8 million would really hit a lot of employees in the face. Not like he hasn't hit enough of them already though without it.

 

[kellwolf]

I bet PCL management is scared to death of this. With our current performance record, if there's a regional shakedown of the two carriers, I might be on the street myself. Hopefully, I can get the ATP and the CRJ type before that happens.....

 

[staplegun]

Beat ya to it Kevin!

Yeah, I'm typing challenged tonight and JC is slow as molasses for me!




Kevin

 

[Polar742]

I've worked for two airlines structured in the "Holdings Company" format. The previous one had iron-clad scope for a one-list. Which was great for job protection. Unfortunately, ignorace was championed (for which I fault the senior pilots [including myself]). There were times we would share a van with our bretheren, and they wouldn't talk with us. I would usually break the ice, but they'd say none of us would talk to them.

Some people on the jumbo shrimp would look down on those flying the barbie fun jet, and be serious about it. A good natured ribbing of your pals is one thing, a serious attitude is another.

Now the new place. Well, let's just say there's two groups. One side is siding with management and blames the other group for all the ills. While there haven't been any fistfights (that we know of), there have been crews refusing to DH on the other company's A/C and what not.

No matter the outcome, the "holdings" format is not good for labor right now. Until we as a group adjust our attitudes and our contracts, this will be haning over us. This ownership format won't go away, because it's too neat and tidy for investors.

As a labor group we need to get our job protections in order. In the past we only had to worry about mergers and acquisitions. In the new world order, we need to also worry about divestitures and who will go with division X and who will stay at division Y.