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NW - DL Merger Talks


Airlines still trying to land merger deal

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Mar 02, 2008

Pilots at Delta Air Lines and Northwest Airlines apparently haven't given up hope for a solution that would reopen merger talks stalled by differences over how to fuse their union seniority lists under a combined carrier.

Pressure is on for the two pilot groups to devise a plan to mix the lists. On Friday, Delta President Ed Bastian said the carrier had no "Plan B" if consolidation talks with Northwest fall apart. Earlier in the week, Bastian and CEO Richard Anderson issued a memo to employees saying the airline would continue to operate on its own if talks fail. A similar note went out from Northwest CEO Douglas Steenland to his employees.

Both pilots groups reportedly have agreed on a $2 billion package that includes more pay, an equity stake in the combined company and a seat on the board of directors. The only contentious point preventing pilots from coming together is seniority, which is paramount because it determines salary, what planes and routes pilots fly and where they live.

"The impasse seems to be at the Northwest [chapter of the pilot union]. Our [chapter] is pretty happy with the terms," Michael Dunn, a Salt Lake City-based Delta pilot, said Friday.

In spite of the stalemate, no one appears ready to declare the merger dead. A few positive signs surfaced late last week signaling that the pilot groups are trying to restart the talks, which broke off Feb.21.

On Thursday, a group of Northwest aviators posted a declaration acknowledging that seniority continues to be the obstacle preventing them from embracing a Delta-Northwest tie-up. But the group, which is not affiliated with the Northwest chapter of the Air Line Pilots Association, said it is still possible the issue can be hammered out.

"That would be best because failure to do so will probably mean a great loss of economic opportunity for all," the Northwest pilots said.

On the same day, The Associated Press reported that Northwest pilots are continuing to look for an acceptable formula to combine seniority lists. It's not clear when negotiators from both chapters of ALPA will meet again, but there's no indication that they won't keep trying, the AP said, quoting a person with knowledge of the situation.

The intense feelings Northwest pilots have for seniority was outlined Wednesday by some of the airline's Seattle-based pilots. In a written update on the progress of talks, the pilots said the largest difference between them "and other potential pilot groups" is that nearly a quarter of Northwest's 4,800 pilots will turn 60 within five years. Although mandatory retirement age is about to change to 65, Northwest pilots survived bankruptcy with their age-60 pension largely intact and many are expected to retire before age 65.

That opens up an avenue for younger Northwest pilots to move quickly up the airline's seniority list, something that might not happen if they are mixed into the younger work force of a consolidated airline, the aviators said.

"Stepping down a seat position or two due to lost, merged seniority can rather easily wipe out a pay raise, especially if the merged company overpays its way back into bankruptcy. Despite bankruptcy reorganization, Delta is a very, very inefficient airline," a Northwest pilot told The Salt Lake Tribune.

Even if the outlines of a formula for mixing seniority lists is reached, meshing the two pilot groups will still be a challenge. US Airways and America West merged in September 2005. Twenty-nine months later, the combined US Airways has not fully integrated the two seniority lists, forcing it to continue operating, in some ways, as two carriers.

Perhaps tellingly, Delta and Northwest entered bankruptcy in the same month the US Airways-America West merger was first announced. It took less time for Delta and Northwest to reorganize and emerge from bankruptcy, which occurred last year.

sltrib.com

Airlines still trying to land merger deal
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