Throughout this thread my points are simple:
The joint US Airways and America West joint ALPA MEC spent two day's last week focusing on further industry consolidation that could include M&A activity, asset sales, and fragmentation. The view of all of the union's advisors is that there will be more corporate transactions in the near-term due to pending bankruptcy filings and changes to POR's/Disclosure Statements. The MEC's/Negotiating Committee's from both companies met with Doug Parker in joint session last week to not only discuss the Transition Agreement, which is very close to being agreed upon, but M&A activity too. According to America West MEC chairman JR Baker "we forged a relationship much more 'old school' (with Parker) where our decision-makers sit down and agree upon concepts and then turn those concepts over to the committees and staff to work out the nuts and bolts."
Baker then made the following points in a letter to the pilots:
-- "Last week, we received two very enlightening presentations from our hired industry experts. Our investment bankers and ALPA financial analysts talked about the strengths and weaknesses of the merger with AAA and the status of the industry overall. This was followed by a presentation from our merger attorney and his industry analyst who reviewed the industry from a merger perspective. Needless to say, things remain chaotic for the domestic airlines financially, and we should expect more consolidation as a result of the expected bankruptcy filings from other U.S. carriers."
-- "Also weighing on our minds is what the industry analysts are saying about a final domestic industry-wide consolidation. In other words, there is a real likelihood that as America West (soon to be US Airways) pilots, we must be prepared and ready to fight a second merger or fragmentation on the heels of this pending merger."
-- "The MEC also recognized that there was great value in having a transition agreement completed before the US I am happy to report to you that I believe the meeting was a success, and that we are well on our way to achieving our goals -- the main ones of which are protecting your pay, benefits and seniority. The transition agreement negotiations have been re-energized and hopefully (with the cooperation of the company), will reach a successful conclusion prior to September 16."
-- "I am happy to report to you that I believe the meeting was a success, and that we are well on our way to achieving our goals -- the main ones of which are protecting your pay, benefits and seniority. The transition agreement negotiations have been re-energized and hopefully (with the cooperation of the company), will reach a successful conclusion prior to September 16."
-- "We have a solid working relationship established with the US Airways MEC and have given our joint negotiators the tools necessary to get a deal for the transition. We forged a relationship much more "old school" where our decision-makers sit down and agree upon concepts and then turn those concepts over to the committees and staff to work out the nuts and bolts. We pushed the politics and emotion to the side as much as possible and are working toward a business-based model."
Meanwhile, I understand from sources outside the company that United's creditors believe the comapny's POR provides unrealistic fuel cost and revenue assumptions. The carriers POR projects a jet fuel price corresponding to Crude Oil prices of $50 per barrel, which is about $14 below Friday's closing price, and represents a $840 million per year difference.
This could cause United to adjust its POR and Disclosure Statement requiring asset sales. I have heard from a well placed source outside of US Airways and United that one option being discussed by the parties is the sale of TED and its assets. A key point to understand is that both ALPA contracts have a 15% fragmentation clause and TED represents less than 15% of the carrier's flying, thus if this deal if executed (which would boost the new US Airways' A320 family aircraft fleet), it would prevent management from having to deal with a thorny labor problem, like we are witnessing with MDA and LOA 91.
Will it occur? I do not know. maybe, maybe not. Is it being discussed? I have been told it is.
Meanwhile, the TCC met with the Company on both Saturday and Sunday and both MEC's went into session today. We are getting close to a new Pilot Transtion Agreement that according to Baker would "protect (pilot) pay, benefits and seniority". Obviously, the joint MEC view is that there will be further M&A activity, but how it unfolds is still unclear.
Regards,
USA320Pilot
