Monday, November 19, 2007

Pilots' view of UA/DL merger rumors

ALPA logoAirline merger rumors have been running rampant over the past several days after a series of news articles suggested that 'consolidation' talks were underway between United Airlines and Delta Air Lines. It has been widely reported that hedge fund Pardus Capital Management, a shareholder in both United and Delta, has been pitching the consolidation idea to the carriers. The airlines have denied that they are in direct talks at this time, nevertheless the news headlines were enough to set off alarm bells in employee groups at both companies.

Pilots at both United and Delta are represented by the same union, the Air Line Pilots Association (ALPA) . The ALPA Master Executive Councils (MECs) for both airline groups have issued statements addressing the merger rumors.

Captain Lee Moak, chairman of the Delta MEC, presented his organization's view in a news release:
"The Delta pilots’ union is aware of the recent overtures made by Pardus and other hedge fund managers who see value in the ‘financial transaction’ aspect of a consolidating event such as a merger, often without regard for the long-term consequences to the corporations, the employees, the traveling public, or the communities we serve.

"Many analysts have suggested that airline industry consolidation is inevitable. The Delta pilots are not opposed to a rational and sensible consolidation scenario. The ‘right’ merger opportunity could draw our support and result in a successful merger. However, we are not interested in a transaction just for transaction’s sake.

"It is crucial that all parties involved understand this very important point: that the Delta pilots will be critical participants from the beginning in any consolidation discussion and potential resultant event, not an afterthought to be considered at a later date. Any consolidating event that involves the Delta pilots will not happen without our active participation and consent."
The statement issued by the United MEC took on a similar tone. Chairman Captain Mark Bathurst said:
"The United pilots have made a significant investment in the future of our airline and have made it abundantly clear to management that we will be opposed to any transaction that does not fully recognize our sacrifices and contributions.

"We will protect the interests and the future of United pilots. All interested parties should understand that any plans to merge or consolidate with Delta or any other carrier will not be met with a rubber stamp from this pilot group.

"We also remind management – and Wall Street – that it is the pilots and other employees who have suffered under this management group. Interested parties need to recognize that the true assets of this corporation are the pilots and other employees and we will not sacrifice again to facilitate consolidation."
At least both pilot groups are represented by the same union, and both groups appear to be on the same page. One would think that should facilitate consolidation of the two pilot groups if a merger were to materialize -- or would that be asking too much?