Southwest Airlines to acquire AirTran Airways, will hire hundreds of new pilots and flight attendants

by B. N. Sullivan

In a move that surprised just about everyone, Southwest Airlines announced today that it will acquire AirTran Airways. Once the two carriers' operations are combined (pending regulatory approval), the merged airline will operate under the Southwest name.

According to the initial press release about the transaction, the combined company will have its headquarters at Dallas.  The acquisition will include AirTran's entire fleet of aircraft, including its Boeing 717s:

Based on current operations, the combined organization would have nearly 43,000 Employees and serve more than 100 million Customers annually from more than 100 different airports in the U.S. and near-international destinations.  In addition, the combined carriers’ all-Boeing fleet consisting of 685 active aircraft would include 401 Boeing 737-700s, 173 Boeing 737-300s, 25 Boeing 737-500s, and 86 Boeing 717s, with an average age of approximately 10 years, one of the youngest fleets in the industry.   Southwest Airlines also announced, previously, that it is evaluating the opportunity to introduce the Boeing 737-800 into its domestic network to complement its current fleet, providing opportunities for longer-haul flying and service to high-demand, slot-controlled, or gate-restricted markets.  This acquisition supports Southwest Airlines’ evaluation of the Boeing 737-800.

No word yet on seniority integration plans for crews, although I'm sure the respective unions are brainstorming already.

The very good news is that no crew furloughs are expected in the foreseeable future. On the contrary, word is out that Southwest is planning to hire 150-200 new pilots, and 250-300 flight attendants very soon.  Michael Van de Ven, Southwest's Chief Operating Officer, said today that training classes for both pilots and flight attendants were anticipated to begin in early 2011.

Here is the link to the Southwest-AirTran merger website: http://www.lowfaresfarther.com/

SkyWest moves to acquire ExpressJet and merge it with ASA

by B. N. Sullivan

SkyWest Inc. and Express Jet Holdings, Inc. announced today that they had signed "a definitive merger agreement" whereby SkyWest will acquire ExpressJet and merge it with SkyWest subsidiary Atlantic Southeast Airlines (ASA). The parties hope to close the deal by the end of this year, subject to regulatory approval.

In a press release about the merger deal, George Bravante, Chairman of the ExpressJet Board, said that "the combined airline will be able to provide a stable, platform for growth for ExpressJet employees after this transaction closes."

More from the ExpressJet press release:

It is anticipated that the combined airline will maintain significant operational presence in each of the hubs ExpressJet currently serves, including Continental's current hubs in Houston, Newark/New York and Cleveland, as well as hubs in Chicago O'Hare and Washington Dulles for United Airlines. In addition, it is expected that the vast majority of front-line employee positions will not be impacted by the acquisition.

The Air Line Pilots Association (ALPA), which represents ExpressJet's 2,700 pilots, immediately issued a statement about the merger plans. Capt. Chris Cashmareck, chairman of the ExpressJet pilots’ unit of ALPA, said, "Every transaction presents opportunities and risks. We need to review and evaluate the plan for the combined airline before we can commit to taking a position to support or oppose the sale/merger. What I can state unequivocally is that, just as airline mergers over the past few years have shown us, it will take pilot involvement and support to realize any true measure of success for this or any transaction."

The pilots union for ExpressJet sent a letter to ExpressJet Holdings management stating the fundamental requirements for support of a sale/merger. Among them are the following:

• the transaction must result in a profitable airline that provides long term stability and progressive career potential for our pilots;
• the transaction must fully honor the scope and successorship provision of our collective bargaining agreement;
• management must commit to negotiating a joint collective bargaining agreement with all involved parties that benefits all pilots; and
• there must be a fair and equitable seniority list integration.

It should be noted that once this merger is realized, SkyWest Inc., the parent of both SkyWest Airlines and ASA, will be the world's largest regional airline company, with a combined fleet of aircraft numbering nearly 700.

SkyWest, Inc. also may be interested in further expansion. According to a Bloomberg article, SkyWest "would consider purchasing Comair from Delta Air Lines Inc. and said U.S. commuter carriers may benefit from further consolidation."

United-Continental merger plans announced

by B. N. Sullivan

This morning United Airlines and Continental Airlines officially announced their plans to merge. The announcement, which came as no surprise, confirmed rumors that had been circulating for some time. The companies' announcement billed the transaction as "a merger of equals" rather than as a takeover of one airline by the other.

Jeff Smisek, the current CEO of Continental, will run the merged operation. Glenn Tilton, the current president and CEO of UAL Corp., United's parent, will serve as non-executive chairman of the new company's Board of Directors for a period of about two years.

The new mega-carrier, which will serve 370 destinations around the world, will carry the United name, but with aircraft dressed in Continental livery. The holding company for the operation will be called United Continental Holdings, Inc.

The corporate headquarters for the new company will be located in Chicago, but also will have offices in Houston, where Continental is presently headquartered. Houston also will be the new airline's largest hub.

Quoting from the press statement that announced the merger:

The combination of United and Continental brings together the two most complementary networks of any U.S. carriers, with minimal domestic and no international route overlaps. The combined company will offer enhanced service to Asia, Europe, Latin America, Africa and the Middle East from well-placed hubs on the East Coast, West Coast, and Southern and Midwestern regions of the United States. The combined company will have 10 hubs, including hubs in the four largest cities in the United States, and will provide enhanced service to underserved small- and medium-sized communities. The combined carrier will continue to serve all the communities each carrier currently serves. Together, Continental and United serve more than 144 million passengers per year as they fly to 370 destinations in 59 countries.

Employees will benefit from improved long-term career opportunities and enhanced job stability by being part of a larger, financially stronger and more geographically diverse carrier that is better able to compete successfully in the global marketplace. The companies believe the effect of the merger on front-line employees will be minimal, with reductions coming principally from retirements, attrition and voluntary programs. The company will provide employees with performance-based incentive compensation programs focused on achieving common goals. The combined company will be focused on creating cooperative labor relations, including negotiating contracts with collective bargaining units that are fair to the company and fair to the employee.

The carriers intend to close the deal by the end of this year, subject to approval by their respective shareholders and regulatory authorities.

For more information, visit http://www.unitedcontinentalmerger.com/

[Photo Source]

British Airways and Iberia sign merger deal

by B. N. Sullivan

British Airways and Spanish flag carrier Iberia have signed a final merger agreement. Today's agreement will implement terms set forth in a memorandum of understanding signed by the two carriers in November of 2009.  The merger is expected to be completed by the end of this year.

According to a press release issued by Iberia, the merger will create a new holding company called International Consolidated Airlines Group SA, which will be known as International Airlines Group. Both airlines will retain their current operations and operate under their individual brands - British Airways and Iberia. The merged carrier will operate a fleet of 408 aircraft flying to 200 destinations.

Airline officials said that the merger "will benefit both airlines’ shareholders, customers and employees," and "has been structured so that it can take advantage of further consolidation in the global aviation industry." Although such consolidations often result in work force reductions, no announcements have been made regarding staffing levels going forward.

Greek carriers Olympic Air and Aegean Airlines to merge

by B. N. Sullivan

Earlier this week, the Greek carriers Olympic Air and Aegean Airlines announced plans to merge. Following a transition period, the merged airline will use the name and trademarks of Olympic Air, according to a statement released to the press. Olympic Handling and Olympic Engineering will become wholly owned subsidiaries of the new company. The merged company is being billed by the partners as "a national airline champion."

Under the terms of the merger agreement, the main shareholder of Aegean (Vassilakis Group) and the sole shareholder of Olympic Air (Marfin Investment Group) will have equal shares in the consolidated company. The merger must be approved by the European Union, however it is projected that the merger will be completed by late 2010 or early 2011. The new company would be listed on the Athens Stock Exchange.

Aegean Airlines and Olympic Air are Greece's two largest airlines. Aegean currently employs about 2,500 people, while Olympic Air's present work force numbers about 1,300. Another 2,000 are now employed by Olympic Handling, while Olympic engineering has 50 employees. Statements from the companies made no mention of whether any employees would be made redundant by the merger.

Aegean Airlines had planned to join the Star Alliance in June of this year. According to a Financial Times article about the merger, "analysts expect the new entity to take Aegean’s place in the grouping."

Republic Airways Holdings to be the new owner of Frontier Airlines

by B .N. Sullivan

The news broke just a little while ago: Republic Airways Holdings, Inc. has won in its bid to acquire Frontier Airlines, beating out competitor Southwest Airlines.

"I look forward to welcoming Frontier to our Republic family,” said Bryan Bedford, Chairman, President and CEO of Republic.

"Frontier has made impressive strides in returning to sustained profitability in a challenging and uncertain economic environment. We congratulate the employees of Frontier. Their commitment and perseverance during the bankruptcy process has allowed the Frontier brand to survive and thrive. Now, we have to turn our attention to the important work of integrating two great brands: Frontier and Midwest Airlines, which enjoy strong loyalty in Denver and Milwaukee.”

"We are pleased to have Republic as a plan sponsor,” said Sean Menke, Frontier President and Chief Executive Officer. "Today’s announcement is the beginning of a wonderful new chapter for this proud organization.”

According to a press statement issued by Southwest Airlines, a major stumbling block to their acquiring Frontier was the failure of the pilots' unions of the two carriers to resolve issues related to merging their seniority lists. The Southwest press release said, in part:

One of the contingencies in Southwest's proposal was that labor groups from the two airlines would need to reach an agreement on how the two Pilot Unions (SWAPA and FAPA) would work together. Despite a good faith and diligent effort by all involved, including the top leadership of the Southwest Airlines Pilots Association (SWAPA) and the Frontier Airlines Pilots Association (FAPA), who labored long into the night, the two unions were not able to come to an agreement before the auction deadline. As a result, Southwest’s bid was deemed unacceptable.

Southwest actually bid substantially more money for Frontier than Republic had offered, however the Southwest bid was contingent on settlement of the labor issues. In the end, Republic prevailed.

A Reuters article about the deal quoted John Stemmler, president of the Frontier Airlines Pilots' Association, who said, "It was a long process that's not quite over but I'm happy with the outcome. It happens to be aligned with keeping more jobs and we're very pleased with that."

Upon Frontier's emergence from bankruptcy, 100% of the stock will be purchased by Republic for $108.75 million.

Northwest Boeing 747-400 sports new Delta Air Lines livery

Delta Air Lines has introduced the first Boeing 747-400 in new Delta livery. An item on the Delta Air Lines Blog, which included the photo at right, said, "Ship 6305 is the first of 16 747-400s operated by Northwest Airlines, now a part of Delta, to be rolled out of a hangar in Victorville, CA in the new paint scheme."

Although anti-trust regulators at the U.S. Department of Justice approved the Delta-Northwest merger in late October of this year, the two carriers continue to operate under two separate FAA operating certificates. Until such time as a single operating certificate is granted for the combined airlines -- anticipated some time in 2009 -- this aircraft and others from the Northwest fleet will continue to be flown by Northwest crews under Northwest operating procedures, regardless of livery.

According to Steve Smith (Delta Fleet Captain, Boeing 747 Fleet), "...you’ll be able to tell what is operated under the Northwest certificate by a label affixed to the side of the plane that reads, 'Operated by Northwest Airlines, Inc.' Air Traffic Controllers will also tell us apart when we’re taxiing around airports worldwide with our new FAA call sign that distinguishes Northwest planes 'in Delta colors'."

[Photo Source]

Northwest Airlines Flight Attendants to Testify on Delta-Northwest Merger Effects

Tomorrow, November 13, 2008, Northwest Airlines flight attendants will testify before the Metropolitan Affairs Committee for the State of Minnesota and Representative Debra Hilstom.  The Committee is investigating how the merger of Northwest Airlines with Delta Air Lines will impact the contracts the state has with the carrier.  The Northwest flight attendants, represented by he Association of Flight Attendants-CWA (AFA-CWA), will testify at the hearing alongside union representatives of other work groups at Northwest.

Northwest Airlines flight attendants have been concerned about the loss of union representation ever since the plans to merge Northwest and Delta were first announced.  In a statement about the upcoming hearings in Minnesota, Patricia Friend, AFA-CWA International President, said, "We applaud the state of Minnesota on their continued commitment to evaluating the potential consequences of the merger on the state and citizens of the state.  This merger has the potential to break the long standing commitments with Minnesota that has enabled Northwest Airlines to become a viable and successful merger partner, and it also threatens to break Northwest flight attendants’ contract and eliminate the union and destroy over 60 years of collective bargaining rights."

Delta Air Lines flight attendants have never had union representation.  Now that the merger is official, the combined the Delta-Northwest flight attendant group must vote to become members of AFA-CWA. According to the rules of the National Mediation Board (NMB), which oversees such representational elections, if less than 50 percent of Delta and Northwest flight attendants participate in the election, the NMB will declare that vote invalid and Northwest flight attendants will lose their contract.

UPDATE Nov. 14, 2008:  The Association of Flight Attendants (AFA) issued a media release about Northwest flight attendants testimony before the State of Minnesota Metropolitan Affairs Committee yesterday.

Excerpt:

“We are very concerned that this merger can be used as an opportunity to break Northwest flight attendants’ contract, eliminate our union and destroy our collective bargaining rights,” said Rene Foss, an AFA-CWA Northwest flight attendant. “Without the protections of our collective bargaining rights, it is likely that management will drive down wages, benefits, work rules and eliminate jobs altogether.”

Due to archaic National Mediation Board (NMB) guidelines, because Delta flight attendants are not represented, the combined work group must vote to become members of AFA-CWA. If less than 50 percent of Delta and Northwest flight attendants participate in the election, the NMB will declare that vote invalid and Northwest flight attendants will lose their contract.

“As Delta and Northwest flight attendants prepare for an AFA-CWA representation vote, it is imperative that Delta management remain neutral in this election. If they are successful in keeping the ‘new Delta’ non union, we could see this merger as the beginning of the end of good jobs in the airline industry, the state of Minnesota and our country as a whole,” said Foss.

Delta management recently began their campaign to pit the flight attendants at both carriers against each other by informing non-union Delta flight attendants that they would be receiving a raise unlike their Northwest colleagues. AFA-CWA leadership quickly responded to the announcement by informing Delta management that the Northwest flight attendant contract does not exclude raises and encouraged management to meet with AFA-CWA leaders.

The Delta-Northwest Merger is a Done Deal

Delta Air Lines and Northwest Airlines announced their merger plans last April, and several days ago anti-trust regulators at the U.S. Department of Justice signed off on the deal. With that, Northwest Airlines is now a wholly owned subsidiary of Delta. The merged airline, called Delta and headquartered in Atlanta, has approximately 75,000 employees worldwide. According to a Delta press release about the merger, the company "will distribute an equity stake to substantially all U.S.-based employees with international employees participating through cash payments in lieu of stock."

Delta's management has promised "that no frontline employees will be involuntarily furloughed as a result of the merger and that no hubs will be closed," and that they have "implemented a seniority protection policy that ensures that frontline employees of both airlines will be provided seniority protection through a fair-and-equitable process."

The two pilot groups have a single collective bargaining agreement with Delta. It remains to be seen whether or not the 21,000 flight attendants of the merged airline will ultimately have union representation. Northwest's flight attendants are unionized, while Delta's have not had a union.

Integrating the two work forces is already underway. I understand that Northwest crews are being fitted for their Delta uniforms, and that pilots, flight attendants, and customer service agents will begin wearing them on March 30, 2009.

Best wishes to everyone at the new Delta as they go through the process of integrating their operations. Here is a video tribute to the Delta-Northwest merger.



If the video does not play or display properly above, click here to view it on YouTube.

Tip of the hat to stejensen for posting the video to YouTube for all of us to enjoy.

Delta and Northwest pilots reach pre-merger agreement

The Air Line Pilots Association (ALPA) has announced that the pilots at Delta Air Lines and Northwest Airlines have reached a tentative agreement (TA) with Delta management on a joint pilot contract, necessary for a successful merger of the two carriers. ALPA represents both pilot groups.

In an ALPA press release, the union described the TA as "the first important step in the process of combining two pilot groups with long, proud histories, into the largest unified pilot group in the world." Details of the TA were not released at this time.

Delta Air Lines confirmed that a tentative agreement had been reached with the two pilot groups "on a joint contract to take effect upon closing of the Delta-Northwest merger, expected later this year." Delta CEO Richard Anderson said:

"We are pleased that the Delta and Northwest pilot groups have reached a tentative agreement and have outlined a process for seniority integration that will allow us to move forward with a unified pilot group. Achieving a joint contract and combined seniority list in advance of the closing of the merger is something that has never been done in this industry and is a testament to the leadership of ALPA and a working together culture."

The culmination of intensive negotiations, the TA now will be presented to the ALPA Master Executive Council (MEC) of each of the pilot groups to be considered for ratification. After review and ratification by each MEC, the agreement will need to be ratified by the membership of both pilot groups.

Delta says that the pilot groups also have established a separate process designed to establish a single pilot seniority list by the close of the merger.

Continental-United merger plan scrapped

It looks like the anticipated announcement of a merger between Continental Airlines and United Airlines is not going to happen. A press release issued today by Continental included the text of a "message to its more than 45,000 employees from Larry Kellner, Chairman and Chief Executive Officer, and Jeff Smisek, President." That message begins:

We want you to know that our Board of Directors met today and has unanimously supported management’s recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time.

The message goes on to explain that "the risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a standalone basis."

The message also hinted that Continental may leave the SkyTeam alliance, stating that "alternatives to SkyTeam" are being evaluated.

United Airlines has not yet released a public statement about the Continental announcement. United CEO Glen Tilton has been saying for years that the airline industry needs to be consolidated, and that airline mergers are inevitable. It remains to be seen whether United will now turn to a different merger partner. A number of news reports have mentioned that United was talking with US Airways as well as Continental.

Something tells me that today's announcement is not the end of the story.

New Global Airline: The Delta-Northwest Merger

Late yesterday, officials at Delta Air Lines and Northwest Airlines formally announced plans to merge the two carriers into one mega-airline. The combined airline will be called Delta, and will be headquartered in Atlanta. Once the merger is complete, the new Delta will be the world's largest carrier, with about 75,000 employees.

A special website has been created (http://www.newglobalairline.com/) to explain to the public the benefits of what the combined management now refers to as America's Premier Global Airline. The website asks the public to "help bring greater opportunity to our employees, enhanced service to our customers, and expanded global access and economic growth to the communities we serve by letting your voice be heard." Among other things, customers are asked to contact their elected officials to "let them know that you are in favor of this airline merger and that we need their support."

Another page on the website explains how the merger is a win for employees. In support of this position, the web page explains:

As a result of this transaction, the seniority of our people is protected; the existing pension plans of our employees and retirees are maintained; the network is expanded; our plans for international growth are strengthened and accelerated; and, most importantly, there is even greater job security with more career opportunities for the people of Delta and Northwest.

The statement goes on to offer the following commitments to the employees of Delta and Northwest:

• Non-pilot employees of Delta and Northwest will participate in the benefits of the combined airline by receiving a 4 percent equity stake in the new company upon closing. The stock will be allocated based upon relative payrolls of the companies and your individual earnings. International employees will receive a cash payment, in lieu of stock.
• There will be no involuntary furloughs of U.S.-based frontline employees or hub closures as a result of this transaction.
• Delta and Northwest employees will enjoy reciprocal pass privileges on both airlines’ worldwide networks, beginning as soon as possible during the regulatory review process.
• Delta pilots will participate in the benefits of the combined airline through a new four-year agreement that facilitates the integration of the carriers and realization of the combined revenue synergies. With respect to Northwest pilots, Delta has committed to use its best efforts to reach a combined Delta-Northwest pilot agreement, including resolution of pilot seniority integration, prior to the closing of the merger.

That last item reflects the Northwest pilots' opposition to the merger plans. In a letter to the membership of the Northwest pilots' union, the chairman of the Northwest Master Executive Council of the Air Line Pilots Association (ALPA) said yesterday that "a merger with Delta may no longer be in the best interests of all Northwest stakeholders, including the Northwest pilot group." At issue is pilot seniority integration. Since the pilot seniority issue was not resolved prior to the merger announcement, the Northwest pilots' union intends to try and stop the merger from going forward.