United Labor Issues Cloud Merger
- Thread starter PA16
- Start date
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
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- #17
As is typical in the airline industry (and other places in business), UA is trying to best what DL did in its NW merger... in the same way, DL and NW benefitted from UA and US' experience in BK. DL and NW petitioned for and got help w/ freezing pension benefits, obtained larger lease discounts on several fleet types such as the MD88, and minimized alot of the employee angst that comes with BK, partly by moving through the process far faster than UA did - and without the 2nd trip US needed.
It is also noteworthy that DL used the NW merger to very quickly correct its own network deficiencies, esp. w/ regard to Asia. After the HND and PEK routes start, DTW will be a larger gateway to Asia than UA is at ORD and the 2nd largest single carrier gateway to Asia behind UA at SFO. DL is now starting a route to CAN that UA said it would several years ago.
UA will have to move fairly aggressively to deal with its own network shortcomings that exist even after the merger. While DL and UA will be much closer to being on-par in Asia, UA has alot of catchup in Africa to do - and they are trying to capture some of those high revenue markets DL opened.
At the same time, UA has minimal presence in the SE, including Florida to Latin America - a deficiency DL also shares although ATL does carry alot of central Florida to Latin America traffic.
The speed with which UA/CO employees allow the company to address those deficiencies could well determine the extent of the revenue benefit that comes from the merger.
It is also noteworthy that DL used the NW merger to very quickly correct its own network deficiencies, esp. w/ regard to Asia. After the HND and PEK routes start, DTW will be a larger gateway to Asia than UA is at ORD and the 2nd largest single carrier gateway to Asia behind UA at SFO. DL is now starting a route to CAN that UA said it would several years ago.
UA will have to move fairly aggressively to deal with its own network shortcomings that exist even after the merger. While DL and UA will be much closer to being on-par in Asia, UA has alot of catchup in Africa to do - and they are trying to capture some of those high revenue markets DL opened.
At the same time, UA has minimal presence in the SE, including Florida to Latin America - a deficiency DL also shares although ATL does carry alot of central Florida to Latin America traffic.
The speed with which UA/CO employees allow the company to address those deficiencies could well determine the extent of the revenue benefit that comes from the merger.
767jetz
Veteran
- Aug 20, 2002
- 3,286
- 2,779
Exactly right. And the "speed at which UA/CO employees allow" this, is directly controlled by how quickly the company stops playing games at the negotiating table and concludes contract negotiations. ALPA has said since the start that there is a right way and a wrong way to move forward. The company will not be able to obtain the advertised synergies, efficiencies, and revenue unless and until our contract is satisfactorily completed.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #19
totally agree, Jetz.
The real question will be whether the new UA plays more by CO's style of labor-mgmt relations or UA's... but before everyone pulls the lever to vote for CO's style, don't forget that CO's average total compensation per employee was as much as 40% lower than that at the other network carriers for much of the past decade, narrowing to closer to a 10% advantage more recently.
It was easy for CO to have top of scale levels higher than other carriers and to give away Explorers and everything else because their employees still had smaller pension benefits than other network carriers and there were a lot lower percentage of employees at the top of scale. Those CO supporters who want to argue that CO's BKs were so long ago that the effects of the BKs had worn off might want to be reminded that full pension benefits are typically after 30 years of service..... CO has not been out of BK with new pension plans for more than 30 years and therefore few employees have comparable pension benefits to other network employees.
Whle CO developed an incredible network and a great product, it is clear that they would have to become more like the other network carriers as their cost advantage diminished... even though CO employees are still lower paid than UA's, the difference is not as great as it once was. It's not a surprise then that CO employees are demanding that their top line pay and benefits not be reduced yet new UA mgmt (which is heavily CO influenced) cannot possibly apply those scales to all employees at the new UA plus pay the "merger premium" which is being "requested" in order for the merger to proceed smoothly.
My guess is that the new UA's costs will increase quite dramatically or there will be a prolonged integration period which will result in reduced revenue benefits.
The real question will be whether the new UA plays more by CO's style of labor-mgmt relations or UA's... but before everyone pulls the lever to vote for CO's style, don't forget that CO's average total compensation per employee was as much as 40% lower than that at the other network carriers for much of the past decade, narrowing to closer to a 10% advantage more recently.
It was easy for CO to have top of scale levels higher than other carriers and to give away Explorers and everything else because their employees still had smaller pension benefits than other network carriers and there were a lot lower percentage of employees at the top of scale. Those CO supporters who want to argue that CO's BKs were so long ago that the effects of the BKs had worn off might want to be reminded that full pension benefits are typically after 30 years of service..... CO has not been out of BK with new pension plans for more than 30 years and therefore few employees have comparable pension benefits to other network employees.
Whle CO developed an incredible network and a great product, it is clear that they would have to become more like the other network carriers as their cost advantage diminished... even though CO employees are still lower paid than UA's, the difference is not as great as it once was. It's not a surprise then that CO employees are demanding that their top line pay and benefits not be reduced yet new UA mgmt (which is heavily CO influenced) cannot possibly apply those scales to all employees at the new UA plus pay the "merger premium" which is being "requested" in order for the merger to proceed smoothly.
My guess is that the new UA's costs will increase quite dramatically or there will be a prolonged integration period which will result in reduced revenue benefits.
