US airline labor wants to recoup lossesReuters Wednesday January 2 2008
CHICAGO/WASHINGTON, Jan 2 (Reuters) - U.S. airline workers, angry and poorer after years of wage and benefit cuts to help save their companies, are determined to recoup some of their losses and avoid new hardships if the industry is transformed through mergers in 2008.
Labor unions have dealt with industry turmoil many times. But after several acrimonious airline bankruptcies -- marked by pension terminations and job losses for the rank and file, while some executives fattened their wallets -- union mistrust of management has never been greater.
A "harder edge" and "more militant" posture, as one industry insider with close ties to labor put it, is reflected by increasingly tougher statements.
John Prater, president of the Air Line Pilots Association (ALPA) representing 60,000 pilots in the United States and Canada, said bankruptcies and steep concessions created a foundation of unrest that fails to work in the service industry.
"We're not going to do that again," Prater said of ALPA members.
Patricia Friend, president of the Association of Flight Attendants (AFA), agreed. "The concessionary period is over," she said.
But it is more than charged rhetoric spewing from the unions. The workers aim to protect themselves as much as possible from any fresh drive for big cost cuts.
RECOVERY ON THE ROCKS
As 2008 dawns, the U.S. airline industry begins its first year since 2002 with no carriers in bankruptcy. However, its modest recovery has begun to flag.
And virtually all airline shares were lower in 2007, with the Amex airline index .XAL> falling about 40 percent amid soaring fuel prices, sagging demand and economic jitters.
That has renewed perennial talk of industry consolidation.
Delta Air Lines Inc, which has warned of a possible operating loss in the fourth quarter, has been the subject of merger speculation with UAL Corp's United Airlines.
US Airways Group Inc says it would like to be a player, and Northwest Airlines Corp and Continental Airlines Inc have been mentioned in various scenarios.
Airline leaders like US Airways Chief Executive Doug Parker say consolidation could improve the industry's health by reducing excess capacity and cutting costs.
But skeptical unions are consulting experts to gauge the potential labor impact from various merger possibilities.
Prater said the ALPA would "be out in front" of consolidation. Delta pilots, the only unionized group at the airline, have told management there would be no merger without their support.
The AFA, also bracing for consolidation, will meet other flight attendant unions in January to plot strategy in the event of further industry change.
The AFA's Friend has no "illusions that we're going to get back everything we lost in bankruptcy" in contract talks, but the unusual alliance of flight attendant unions may blunt the merger-related trauma.
"With some modicum of profitability returned and no imminent danger of disappearing off the face of the earth, we're looking at consolidation," Friend said.
UNIONS BLOODIED BUT UNBOWED
By most measures, airline unions were weakened by their struggles in the last few years. The lone merger in 2005 of the old US Airways and America West left pilots at the new company bitter and divided over failed attempts to merge their contracts. Mechanics at United are considering new representation with the Teamsters. They are currently with the Aircraft Mechanics Fraternal Association.
Mechanics at Northwest went on strike only to watch the airline operate normally with replacement labor.
Flight attendants at Northwest suffered the indignity of seeing their contract voided by a bankruptcy court in favor of new terms dictated by the airline. The workers later ratified a deal that granted Northwest the savings it had demanded but only after a judge blocked their threat to strike.
"That certainly did knock the flight attendants back a little," said Lowell Peterson, a labor attorney with Meyer, Suozzi, English & Klein.
Speaking of the industry, Bill Warlick, an airline debt analyst at Fitch Ratings, said a negative airline revenue outlook could hinder efforts by labor to reclaim what they lost in bankruptcy in contract talks beginning mainly in 2009.
"I think we're clearly at a point in the industry cycle where it's going to be difficult for anyone," Warlick said.
But Peterson of Meyer, Suozzi said labor unions remain a formidable adversary to management and have the means to disrupt merger plans that are unfavorable to workers.
"A sensible consolidation of the industry will take the employees' foremost concern -- which is job security -- into account," Peterson said.
Delta aims to start UAL, Northwest merge talks: reportJanuary 10, 2008 2:18 PM ET
Delta Air Lines Inc plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines Corp and United Airlines parent UAL Corp , the Wall Street Journal reported on Thursday.
Citing unnamed people familiar with the matter, the Wall Street Journal said on its Web site that Delta would aim to ultimately choose between the two carriers.
Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways Group Inc , set up a special board committee months ago to help it review its strategic options, including mergers.
Betsy Talton, spokeswoman for Delta, said the No. 3 U.S. carrier was not providing updates on the special committee's work, while it was in progress.
In November, Delta moved to quickly deny media reports that it was in merger talks with UAL.
"Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation," said UAL spokeswoman Jean Medina.
Northwest was not immediately available from comment.
Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.
In afternoon trade, Delta shares rose 17.8 percent to $15.92, Northwest surged 24.1 percent to $14.90, and UAL climbed 21.9 percent to $31.73.
A deal between Delta and either airline would likely create the world's largest carrier, overtaking AMR Corp's American Airlines. An acquisition of either airline by Delta would be worth at least $3.5 billion, based on current market values.
The modest recovery in the U.S. airline industry has begun to flag amid soaring fuel prices and a sagging U.S. economy. Most major U.S. airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.
Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.
Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing U.S. antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.
Not necesarily IMO. First of all Oil is still below it's all time high
adjusted for inflation and secondly Fares are well below an all
time high adjusted for inflation.
The old HP used to be extreamly oil price consious. Up until
2000 or so they had been doing well due to thier prior investment
in oil a good prices.
Now this may seem extreemly naive but consider this one example:
Many people benifit from a high price of oil and they like to fly.
Anyway it's just one way of looking at it.
Mergers and consolidations are going to drive up air fares. Less
competition--higher fares. We'll see BF
